By SEMA Washington, D.C., Staff
The Biden Administration finalized a new rule to withdraw the independent contractor regulation issued in the closing days of the Trump Administration. While the issue may be revisited in the future, the U.S. Department of Labor (DOL) is currently reverting to previous guidance on distinguishing whether an individual should be classified as an independent contractor or employee. Specifically, the DOL is deferring to the seven-factor “economic realities” guidance test issued in 2008 and based on court cases. Factors to be considered include:
- The extent to which the services rendered are an integral part of the principal's business.
- The permanency of the relationship.
- The amount of the alleged contractor's investment in facilities and equipment.
- The nature and degree of control by the principal.
- The alleged contractor's opportunities for profit and loss.
- The amount of initiative, judgment or foresight in open market competition with others required for the success of the claimed independent contractor.
- The degree of independent business organization and operation.
The increase in independent contractors in recent years who perform on-demand services, such as drivers and other gig workers, has placed a focus on the definition. Company employees have protections under the Fair Labor Standards Act (FLSA), such as minimum wage and overtime compensation that do not apply to independent contractors.
For more information, contact Stuart Gosswein at email@example.com.