Independent Contractors

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On January 2, the U.S. Department of Labor (DOL) published a hotly anticipated final rule, which establishes a six-factor test for determining whether a worker is an employee or an independent contractor for purposes of coverage under the Fair Labor Standards Act (FLSA). The final rule was adopted after publication of a proposed rule in October 2022 and following a 61-day comment period in which the DOL received more than 55,000 comments. The final rule also rescinds an independent contractor rule, issued in January 2021, which never went into effect due to legal challenges. The new final rule becomes effective on March 11.Continue Reading DOL Publishes Final Independent Contractor Rule

Q: Did the U.S. Department of Labor (DOL) change how independent contractors are classified, and if so, what does this mean for my company?

A: Potentially. On October 11, the DOL announced a proposed new standard for determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act. The new rule classifies workers using six non-exhaustive factors: (1) the worker’s opportunity for profit and loss; (2) the employer and the employee’s investments; (3) the degree of permanence of the working relationship; (4) the nature and degree of the worker’s control over the work; (5) the extent to which the work is integral to the employer’s business; and (6) the worker’s degree of skill and initiative.Continue Reading DOL Proposes New Standards on Independent Contractor Classification

Q: Does federal antitrust law bar independent contractors from engaging in a group boycott to increase wages and alter conditions of employment?

A: No. The First Circuit Court of Appeals recently held that an individual’s independent contractor status does not bar application of the labor-dispute exemption to antitrust law, which exempts collusion among potential competitors for the purpose of increasing wages or improving conditions of employment.Continue Reading First Circuit Holds Antitrust Labor-Dispute Exemption Applies to Independent Contractors’ Protest Activities

Q: What do employers need to know about recent state and local laws providing for protections for gig workers?

A: Employers and businesses are likely familiar with recent changes to rescind more employer-friendly, Trump-era FLSA regulations governing independent contractor classification and joint employment status, which we previously covered. However, employers may be less familiar with various new laws being passed or considered by cities and states that provide additional protections specific to “gig” workers — i.e., those independent contractors who perform “on-demand” services.
Continue Reading State and Local Laws Require Greater Protections for Gig Workers: What Employers Need to Know

Q: Do Trump-era FLSA regulations governing independent contractor classification and joint employer status (still) apply?

A: The U.S. Department of Labor (USDOL) announced its decision to reverse a Trump-era rule governing the employee/independent contractor distinction under the Fair Labor Standards Act (FLSA) that was scheduled to go into effect on March 8. The decision comes on the heels of another recent announcement by the Biden administration that requested public comment about its intention to rescind the Trump-era regulations governing joint employment under the FLSA, which went into effect in March 2020. Both reversals have significant implications for whether a company is considered an employer under the FLSA and thus subject to minimum wage, overtime, and recordkeeping requirements under the statute.
Continue Reading Biden Administration Eliminates Key Trump-Era Regulations for Employment Relationships Under FLSA

Q: Does the “ABC test” for independent contractor status in the state of California apply retroactively?

A: The California Supreme Court recently issued a decision clarifying that the ABC test for determining independent contractor status does indeed apply retroactively.Continue Reading California Supreme Court Clarifies Dynamex’s “ABC” Test, Concluding that Independent Contractor Status Applies Retroactively

Q: Can you provide an overview of Election Day 2020 ballot measures approved by voters that may impact the workplace?

A: While President-elect Joe Biden’s victory over incumbent President Donald Trump dominated Election Day 2020, voters also approved various ballot measures that will have repercussions for workplaces throughout the nation. Below find a summary of some of the biggest employment-related ballot measures approved by voters.

Continue Reading Voters Nationwide Approve Ballot Measures Impacting the Workplace

Q: What do I need to know about the proposed federal rule on independent contractor classification?

A: The U.S. Department of Labor (DOL) issued a proposed rule, making it easier for workers to be classified as independent contractors under the Fair Labor Standards Act (FLSA).

When evaluating independent contractor classifications under the FLSA, courts traditionally have applied the “economic realities” test, which relies on balancing seven factors. However, this has resulted in inconsistent court rulings and confusion among companies and individuals. The DOL’s proposed rule adopts a modified version of this test, focusing on certain factors, while clarifying others.
Continue Reading DOL Proposes New Rule Clarifying Independent Contractor Status

Q: What are the details of Assembly Bill (AB) 2257 and how does it change the way I utilize independent contractors?

A: On September 4, 2020, Gov. Gavin Newsom signed Assembly Bill (AB) 2257, which substantially revises and clarifies the exemptions to AB 5, a recently passed California statute that effectively precludes many industries from being able to utilize independent contractors.

AB 5 was signed into law on January 1, 2020, and requires using the “ABC Test” to determine whether a worker in California is an employee or independent contractor under the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission wage orders. Under the ABC Test, to defeat claims premised on independent contractor misclassification, a defendant must demonstrate: (A) the worker is free from control and direction of the hiring entity in connection with performing the work, both under contract and in fact; (B) the worker performs work outside the usual course of the hiring entity’s business, and; (C) the worker customarily engages in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. Many industries have complained about component (B), which effectively precludes independent contractors from performing work in the business of the hiring company.
Continue Reading AB 2257: A Significant Expansion of California Independent Contractor Laws

Q. What is the standard for determining whether an individual is an independent contractor under Pennsylvania’s unemployment compensation law?

A. Following a recent decision from the Pennsylvania Supreme Court, businesses now face a tougher standard under the state’s unemployment compensation law for demonstrating that a worker is an independent contractor and not an employee. In A Special Touch v. Commonwealth of PA, the Court held that, to claim the exemption from tax liability for a self-employed worker, the employer must show that the individual in question is involved in an independent trade or business “in actuality,” rather than “having the mere ability to be so involved.”
Continue Reading Pennsylvania Supreme Court Clarifies Independent Contractor Standard For Purposes of Unemployment Compensation Taxes