<img height="1" width="1" style="display:none;" alt="" src="https://px.ads.linkedin.com/collect/?pid=3500553&amp;fmt=gif">

1 min read

DOL to Withdraw Independent Contractor Rule Effective May 6, 2021

DOL to Withdraw Independent Contractor Rule Effective May 6, 2021

Marty Walsh stated that the withdrawal will “help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect”

Effective May 6, 2021, the Independent Contractor Rule will be withdrawn by the Department of Labor (DOL). The DOL is withdrawing the rule for the following reasons, as stated in their news release.

  • The independent contractor rule was in tension with the Fair Labor Standards Act’s (FLSA) text and purpose, as well as relevant judicial precedent.
  • The rule’s prioritization of two “core factors” for determining employee status under the FLSA would have undermined the longstanding balancing approach of the economic realities test and court decisions requiring a review of the totality of the circumstances related to the employment relationship.
  • The rule would have narrowed the facts and considerations comprising the analysis of whether a worker is an employee or an independent contractor, resulting in workers losing FLSA protections.

For more information about the FLSA and other wage and hour laws, visit the DOL/WHD website or call 1-866-4US-WAGE.

OutSolve's Insight

The OFCCP uses the twelve “Darden” factors to determine whether an individual is an employee or an independent contractor (https://www.dol.gov/agencies/ofccp/faqs/employee-relationship#Q2). Independent contractors need not be included in an AAP, nor counted toward the 50-person AAP threshold).

The now-rescinded rule would have used only five factors to determine employee vs. independent contractor, with heavy reliance on two in particular, worker control over the work, and worker ability to profit or loss. This would have made it easier to exclude workers from AAP coverage.

OutSolve is available to help you with any questions about which employee types to include in an AAP. Please contact us at info@outsolve.com

OutSolve

Founded in 1998, OutSolve has evolved into a premier compliance-driven HR advisory firm, leveraging deep expertise to simplify complex regulatory landscapes for businesses of all sizes. With a comprehensive suite of solutions encompassing HR compliance, workforce analytics, and risk mitigation consulting, OutSolve empowers organizations to navigate the intricate world of employment regulations with confidence.

Related Posts
OutSolve Awarded Top Workplace Award 7th Year in a Row

OutSolve Awarded Top Workplace Award 7th Year in a Row

OutSolve has been named a Top Workplace in New Orleans by the Times-Picayune. This award marks the 7th consecutive year earning this distinguished...

6 Advantages of Working with a Compensation Consultant

6 Advantages of Working with a Compensation Consultant

6 Reasons Companies Are Outsourcing to Compensation Consultants In today’s labor market, how you structure compensation for your team is critical....

Colorado Pay Transparency Law Requirements

Colorado Pay Transparency Law Requirements

The days of keeping salaries a secret are coming to an end. Today’s workforce, especially younger generations, is increasingly vocal about wanting...