DOL Issues Proposed Rule Clarifying Employee, Independent Contractor Status Under Federal Wage and Hour Laws; Comments Due April 28

• Rescind DOL's 2024 final rule addressing the classification of independent contractors and replace it with an analysis for employee classification similar to the one adopted by DOL in 2021;
• Make it easier to properly differentiate between employees with the protections under FLSA and those workers who work as independent contractors, consistent with Supreme Court and federal circuit court precedent; and
• Apply DOL's analysis to the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act, both of which use the FLSA’s statutory definition of “employ.”

• Apply an “economic reality” test to determine whether a worker is in business for himself or herself as an independent contractor or is an employee economically dependent on an employer for work;
• Identify and explain two “core factors” to help determine if a worker is economically dependent on an employer for work or in business for him- or herself: the nature and degree of control over the work and the worker’s opportunity for profit or loss based on initiative and/or investment;
• Identify other factors to help determine a worker’s status as an employee or independent contractor, including the amount of skill required for the work, degree of permanence of the working relationship, and whether the work is part of an integrated unit of production;
• Advise that the actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible; and
• Provide eight fact-specific examples applying the factors to real-life circumstances.