DOL to issue independent contractor rule

The U.S. Department of Labor (DOL) will issue a new independent contractor regulation, seeking to bring both clarity and finality to one of the most controversial areas of employment law.

What proposed regulation says

To determine whether a worker is an independent contractor, the proposed rule uses an "economic reality" test, which considers two core factors:

• Whether the worker is in business on her own, i.e., independent; or
• Whether the individual is economically dependent on another company for work, thus, an employee.

If the two factors aren’t conclusive, three other subordinate factors are to be considered: the amount of skill required for the work, the degree of permanence of the working relationship between the individual and the potential employer, and whether the work is part of an integrated unit of production.

The DOL’s proposed rule also makes clear that requiring an individual to comply with specific legal obligations, satisfy health and safety standards, carry insurance, meet contractually agreed-upon deadlines or quality control standards, or follow other similar terms that are typical of contractual relationships between businesses would not constitute control that makes the individual more or less likely to be an employee under the Fair Labor Standards Act (FLSA).