DOL Finalizes New Rule on Independent Contractor Classification


Following up on its release of a proposed rule issued in September 2020, the DOL finalized new regulations on classifying independent contractors that it suggests will provide clarity for employers. On January 6, 2021, the DOL announced the Final Rule, which will take effect on March 8, 2021 (60 days after publication).

At the outset, the Final Rule addresses comments that it had received in response to the publication of the proposed rule, specifically noting that many Uber drivers were supportive overall, and some commentators stated that there was no need for a Rule at all. The DOL pointed to the inconsistencies and confusion in past applications of the economic realities test as a reason why the Final Rule was necessary.

The Final Rule looks similar to the proposed rule published in September 2020. The Final Rule:

  • Adopts an “economic realities” test to determine a worker’s status and provides clarification on the concept of economic dependence, the “touchstone” of the economic reality test; and

  • Describes the five factors involved in the “economic realities” test:

    • The nature and degree of the individual’s control over the work;

    • The opportunity for profit or loss;

    • Skill required for the work;

    • Permanence of the working relationship; and

    • Whether the work is part of an integrated unit of production.

 Full Article

Source: The National Law Review

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