DOL Proposes New Multifactor Rule For Determining Independent Contractor Status

On October 11, 2022, the U.S. Department of Labor (DOL) unveiled a new proposed rule that could make it more difficult for workers to be classified as independent contractors under the Fair Labor Standards Act (FLSA). The proposed rule, which would rescind and replace a prior rule published in January 2021, would shift the analysis of whether a worker is an employee of a business for purposes of the FLSA from a more streamlined "economic reality" test to a more complex "totality-of-the-circumstances" standard.

Worker classification under the FLSA is significant, as independent contractors are not subject to the minimum wage and overtime requirements of the FLSA. While independent contractors are a key component of the economy, courts and the DOL have often been inconsistent in determining how to classify workers.