Employers often ask, "Can this worker be an independent
contractor?" The answer is often unclear due to the different
tests for employee versus independent contractor status, which vary
between federal circuit courts and from state to state. In the end,
the answer typically depends on how much risk the employer is
willing to take. In an effort to simplify the answer, the U.S.
Department of Labor (DOL) announced on January 6, 2021, a final rule pertaining
to employee versus independent contractor status under the Fair
Labor Standards Act (FLSA). The rule is scheduled to take effect on
March 8, 2021.
DOL's Intent
With the rule, the DOL intends to address a critical issue for
many workers and employers, particularly in the growing
"gig" economy. According to Eugene Scalia, the current
Secretary of Labor, issuance of the rule was driven in part by the
passage of laws such as California's AB-5, which requires many
businesses to change worker classifications and identify
