Law & Order

Department of Labor Issues Proposed Rule to Reclassify Some Independent Contractors

By SEMA Washington, D.C., Staff

The Biden administration is proposing a more stringent test for determining when companies must count independent contractors as employees. The Department of Labor (DOL) previously withdrew a 2021 Trump administration rule that made it easier for companies to classify more workers as independent contractors. Under the Fair Labor Standards Act (FLSA), employees are eligible for certain protections, such as minimum wage, medical leave and overtime pay that are not required for contractors.

The proposed rule would apply the test that was used before the 2021 rule to determine how a worker should be classified. The proposed test will consider six factors: the nature and degree of the worker’s control over the work, the worker’s opportunity for profit or loss based on personal initiative or investment, investments by the worker and the employer, the degree of permanence of the working relationship, the extent to which the work performed is an integral part of the employer’s business and the degree of skill and initiative exhibited by the worker. The rule would also apply a totality-of-the-circumstances analysis of the economic reality test when considering the whole activity—an approach that could make it easier to define a gig worker as an employee.

Public comments on the DOL’s proposed rule are due by November 28, 2022.

For more information, contact Caroline Fletcher at