What employers need to know about DOL's independent contractor rule

The U.S. Department of Labor (DOL) recently issued a final rule withdrawing the Trump administration's attempt to revise the agency's interpretation of independent contractor status under the Fair Labor Standards Act (FLSA). The net effect is independent contractor analysis under the FLSA remains the same as it has been for several decades.

How we got here

In January, the Trump DOL issued an independent contractor rule that was set to take effect March 8 of this year. When it released the new rule, the agency said it was making changes "to promote certainty for stakeholders, reduce litigation, and encourage innovation in the economy." The proposal placed a strong emphasis on (1) the nature and degree of the worker's control over the work and (2) the individual's opportunity for profit or loss.

In explaining the withdrawal, the DOL said "numerous state officials, members of Congress, labor unions, social justice organizations, worker advocacy groups, and individual commenters wrote in support of the Department's proposal to withdraw the Independent Contractor Rule." The agency added the "commenters expressed opposition to the Independent Contractor Rule predominantly on the basis that, in their view, the Rule would have facilitated the exploitation of workers reclassified or misclassified as independent contractors as a consequence of the Rule."

The Trump DOL's rule never took effect, and the current agency's withdrawal of the proposed rule returns the issue to the status quo.

So, what is proper analysis?