On January 7, 2021, the U.S. Department of Labor (DOL) published a new rule for determining whether Independent Contractors are employees under the FLSA. The new rule, which was to become effective March 8, 2021 focuses on the “economic realities” of the work arrangement and, whether the employer has actual control over the Independent Contractor. The new rule if enacted would be part of the PRO Act, proposes the following:
· Adopt an “economic reality” test to determine a worker’s status as an FLSA employee or an independent contractor.
· To identify and explain two “core factors,” to help determine if a worker is economically dependent on someone else’s business or in in business for themselves;
· Identify three other factors that may serve as additional guidance in the analysis; and,
· Advise that the actual practice is more relevant than what may be contractually or theoretically possible.
However, on March 2, 2021, the DOL announced that it decided to delay the independent contractor rule from March 8th to May 7th, 2021 to allow the agency additional time to review the multiple issues of law, policy, and fact before it goes into effect. It remains to be seen if the new rule will go into effect, be withdrawn or rewritten. Stay tuned! Contact firstname.lastname@example.org for guidance on determining if someone is a Contractor or an employee .
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