The Department of Labor on October 13 announced it will modify Wage and Hour Division regulations to revise its analysis for determining employee or independent contractor classification under the Fair Labor Standards Act.

The proposal, known as a Notice of Proposed Rulemaking, is the first step in the federal rulemaking process and begins a period where the public can review and comment on the proposal.

Specifically, the proposed rule would do the following, according to the department’s press release:

  • Align the department’s approach with courts’ FLSA interpretation and the economic reality test;
  • Restore the multifactor, totality-of-the-circumstances analysis to determine whether a worker is an employee or an independent contractor under the FLSA;
  • Ensure that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors;
  • Revert to the longstanding interpretation of the economic reality factors. These factors include the investment, control, and opportunity for profit or loss factors. The integral factor, which considers whether the work is integral to the employer’s business, is also included;
  • Assist with the proper classification of employees and independent contractors under the FLSA;
  • Rescind the 2021 Independent Contractor Rule.

Comments can be submitted until November 28, 2022, at the link here.

The full proposed rule can be read here.

 

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