New Independent Contractor Proposed Regulations and the Art of the Deal

"I never get too attached to one deal or one approach. For starters, I keep a lot of balls in the air, because most deals fall out, no matter how promising they seem at first."

--Donald J. Trump, The Art of the Deal 

As we noted in a prior blog, on September 22, 2020, the U.S. Department of Labor (“DOL”) announced a proposed rulemaking in the Federal Register. See https://www.awrcounsel.com/blog/2020/9/28/the-silly-season-in-government-contracting-arrives-earlythe-rush-is-on-to-issue-executive-orders-new-rules-and-to-bring-judicial-challenges?rq=independent%20contractor. The proposed rule addresses how to determine whether a worker is an employee under the Fair Labor Standards Act (“FLSA”) or an independent contractor. See https://www.federalregister.gov/documents/2020/09/25/2020-21018/independent-contractor-status-under-the-fair-labor-standards-act . 

DOL describes its rulemaking in the following terms:

·        Adopt an “economic reality” test to determine a worker’s status as an FLSA employee or an independent contractor. The test considers whether a worker is in business for themselves (independent contractor) or is economically dependent on a putative employer for work (employee);

·        Identify and explain two “core factors,” specifically: the nature and degree of the worker’s control over the work; and the worker’s opportunity for profit or loss based on initiative and/or investment. These factors help determine if a worker is economically dependent on someone else’s business or is in business for themselves;

·        Identify three other factors that may serve as additional guideposts in the analysis including: the amount of skill required for the work; the degree of permanence of the working relationship between the worker and the potential employer; and whether the work is part of an integrated unit of production; and

·        Advise that the actual practice is more relevant than what may be contractually or theoretically possible in determining whether a worker is an employee or an independent contractor.

Id.

Interested parties have only 30 days to submit comments from the date of publication. That means you have to Oct. 22, 2020 to chime in at the regulations.gov website. Comments become a matter of public record and are posted at that website.  

Presumably, these regulatory changes are in essence a done deal. They will be pushed through to final status before the end of Mr. Trump’s first and perhaps only term. Whether those regulations stick, however, will be determined in the next Presidential term. As Mr. Trump said, most deals fall out.