DOL proposes new employer-friendly rule on independent contractors

The U.S. Department of Labor (DOL) is proposing a new regulation it says will simplify the determination of when a worker is an independent contractor instead of an employee. The rule, which is being fast-tracked with a shorter comment and adoption period, appears to make it easier for employers to classify workers as independent contractors rather than employees covered by federal minimum wage and overtime laws. The move expands the DOL’s efforts to loosen restrictions on independent workers.

Proposal focuses on ‘economic realities’

Currently, the employee-vs.-independent-contractor analysis is based on the assessment of multiple factors, with none being deemed dispositive or entitled to greater weight. The proposed rule focuses on the “economic realities” and culls down the test to five essential questions, with the following two being given the greatest weight:

• Nature and degree of the employer’s control over the work; and
• Worker’s opportunity for profit or loss based on personal initiative or investment.

The other three factors, deemed “guideposts” to aid in the analysis, will typically be applied when the two primary factors conflict. The guideposts are:

• Amount of skill required for the work;
• Degree of permanence in the work relationship; and
• Whether the work is part of an integrated unit of production.

‘Some prefer to be independent’