DOL May Override Independent Contractor Rule
The U.S. Department of Labor has proposed repealing a rule that would revise the agent’s interpretation of independent contractor status under federal law. The rule was supposed to take effect on May 7th.
The final rule was published January, 7. Then, DOL said the law would promote “certainty for stakeholders, reduce litigation and encourage innovation in the economy.” Last month the agency said it was postponing the adoption of the final rule for 60 days.
The independent contractor final rule proposed a federal standard that was generally more favorable for motor carriers than the so-called ABC test. The test used in the California Assembly Bill 5 law determines whether a truck driver is an employee or an independent contractor.
The rule also said about several factors that can be useful in the analysis: the nature and degree of the worker’s control over the work; the worker’s opportunity for profit or loss; the amount of skill required for the work; the degree of permanence of the working relationship between the worker and the potential employer. And the last one is whether the work is part of an integrated production unit.
The U.S. Supreme Court has stated that the “striking breadth” of the FLSA’s definition of “employ” – “to suffer or permit to work” – “stretches the meaning of ‘employee’ to cover some parties who might not qualify as such under a strict application of traditional agency law principles.
“Thus, the FLSA expressly rejects the common law standard for determining whether a worker is an employee,” the withdrawal proposal said. “In addition to these legal concerns, the department is concerned, as a policy matter, that the rule’s narrowing of the analysis would result in more workers being classified as independent contractors not entitled to the FLSA’s protections, contrary to the act’s purpose of broadly covering workers as employees.”