DOL Rule On Independent Contractor Classification Delayed Until May 2021

Chicago, Ill. (March 8, 2021) - Today, the United States Department of Labor's (DOL) newly enacted rule concerning the classification of independent contractors was scheduled to go into effect. However, under direction from the Biden Administration, the DOL recently announced a delay of the effective date until May 7, 2021. The rule consists of a multifactor test intended to clarify the analysis that determines whether individuals are independent contractors or employees. Specifically, the rule sets forth the following relevant factors in determining whether individuals are independent contractors or employees:

1. Economic Reality Test: This factor reaffirms the well-established "economic reality" test to determine whether an individual is running their own business (an independent contractor) or is economically dependent on a potential employer for work (an employee covered by the Fair Labor Standards Act). Substantial case law exists addressing whether