DOL Proposes New Rule Regarding Independent Contractor Classification

On Feb. 27, the DOL published a Notice of Proposed Rulemaking (the "Proposed Rule") that clarifies the legal framework used to determine whether a worker is properly classified as an independent contractor versus an employee. Properly classifying workers under the Fair Labor Standards ("FLSA") is critical for employers, as the classification of a worker as an independent contractor rather than an employee deprives the worker of certain legal rights and benefits, including unpaid overtime and minimum wage. Such misclassification can result in costly litigation, damages, and penalties to the employer – even if the worker prefers independent contractor classification. As a result, employers must stay abreast of the current rules imposed by the Department of Labor ("DOL") to determine whether a worker meets the criteria to be properly classified as an independent contractor; if such criteria is not met, the worker is legally an employee and must be classified as such.