Published in the New Hampshire Business Review (10/20/22)
In January 2021, during the final days of the Trump Administration, the Department of Labor issued a new rule regarding the classification of employees and independent contractors for purposes of the federal Fair Labor Standards Act. This rule, viewed by many as being more “employer friendly” than previous DOL policies, applies an “economic reality” test that asks whether “the individual is, as a matter of economic reality, in business for him or herself.” The test considers five factors, but emphasizes two in particular: the nature and degree of the worker’s control over the work, and the opportunity for profit or loss. The remaining factors are subsidiary, and are only to be considered if classification is not clear after applying the first two.
Almost immediately, the Biden Administration took steps to delay, and then rescind the Trump era rule. Earlier this year, a federal court blocked these efforts, and, for now, the 2021 Independent Contractor Rule remains in effect. All of this back and forth has called into question the standards for determining employee classification questions under the FLSA and has caused significant confusion for employers.
To read the rest of this article, click here.