U.S. Department of Labor Proposes Rule Changes on the Classification of Independent Contractors

November 2, 2022

The new proposed rule changes who can be considered an independent contractor

U.S. Department of Labor Proposes Rule Changes on the Classification of Independent Contractors

On Oct. 13, the Department of Labor (DOL) issued a proposed rule to change who can be considered an independent contractor under the Fair Labor Standards Act (FLSA). The proposed rule change would rescind a previous independent contractor rule from the Trump administration. Under the proposed rule employers would need to consider the totality of six economic factors when determining a worker’s status as an employee or an independent contractor. The employer would have to consider all the factors in their totality before making a worker classification decision. The economic reality factors are:

Opportunity for Profit or Loss Depending on Managerial Skill
Investments by the Worker and the Employer
Degree of Permanence of the Work Relationship
Nature and Degree of Control
Extent to Which the Work Performed is an Integral Part of the Employer’s Business
Skill and Initiative

Further details on each factor can be found here. NFIB opposes the proposed rule due to the negative impact it will have on small businesses. Beth Milito, Executive Director of the NFIB Small Business Legal Center, provided these comments on the proposed rule: “Small business owners need clarity for determining who is and isn’t considered an independent contractor under the Fair Labor Standards Act. The current rule has transparent standards for classifying employees and independent contractors, something NFIB has long advocated for. Unfortunately, the Department of Labor’s new proposed rule will complicate the current standards and ultimately lead to frivolous litigation and increased costs for small businesses. NFIB opposes the proposed rule and changes to the independent contractor standard.” NFIB supports the protection of, and efforts to further secure, the right of individuals to work as independent contractors and for business owners to choose to lawfully classify workers as independent contractors. NFIB will submit a comment on the proposed DOL rule during the public comment period. For additional questions, reach out to NFIB’s Small Business Center directly at 202-314-2070 or info@NFIB.org. DOL is currently accepting public comments on the proposed rule, now through Dec. 13. If you’d like to take action and tell them how these changes would affect your small business, click here.

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Topics:

Labor

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