LABOR DEPARTMENT RECONSIDERING WHO IS AN EMPLOYEE AND WHO IS AN INDEPENDENT CONTRACTOR
On October 11, the U.S. Department of Labor issued a Notice of Proposed Rulemaking that would revise existing regulations on who qualifies as an “employee” and who qualifies as an “independent contractor” for purposes of overtime pay under the federal Fair Labor Standards Act (“FLSA”). Generally, with a few exceptions, non-exempt employees who work more than 40 hours in a single workweek are entitled to overtime pay. Independent contractors are not eligible for overtime pay. The new regulations are an attempt to reverse the guidance that was used during the Trump administration.
If the new rules go into effect, more people who were previously classified as independent contractors may be considered as employees. Under the proposed new rules, consideration will be given to 6 factors which represent the economic realities of the relationship. These new factors (none of which by themselves is determinative) include:
- The degree of employer control over the work performed;
- The workers opportunity for profit or loss depending on their managerial skills;
- The worker’s investment in equipment or materials or the employment of others;
- Whether the work performed required special skills;
- The permanency of the working relationship; and
- Whether the services rendered were integral to the employer’s business.
The new rule is still in the proposal stage and the Department of Labor has
invited public comment until November 28, 2022. If the proposed rule should pass, employers need to assess very carefully how they are classifying employers for purposes of federal overtime compliance.
With over 38 years’ experience in advising employers and employees on workplace issues, let Boznos Law work with you to ensure you are ready to meet the challenges posed by the changing employment landscape. Call Bill Boznos today at (630) 375-1958 or contact us at www.boznoslawoffice.com/contact-us through our website at www.boznoslawoffice.com
