The Biden Administration’s Department of Labor on Jan. 10 finalized a rule that rolls back a Trump-era rule offering guidance on determining employee or independent contractor classification under the Fair Labor Standards Act (FLSA).
The DOL’s new rule, which takes effect March 11, attempts to officially codify, for the first time, the standard that courts have been using for decades up until the Trump Administration’s rule was published in 2021.
[Related: New DOL rule on contractor/employee status under fair-labor law: The legal perspective]
As reported when the rule was published, the DOL’s new rule returns to a “totality-of-the-circumstances” analysis that courts have historically used when determining a worker’s classification. When classification cases arise for the purposes of determining applicability of minimum wage and overtime rules to a worker or class of workers, the analysis will employ six “economic reality” factors that are weighted equally to make the determination.
Greg Feary, president and managing partner of transportation law firm Scopelitis, said such a test is a “multi-factor balancing test” -- if more factors lean toward one classification over the other, that’s the result of the test. That’s considerably different from an "ABC test," as seen in California with its AB 5 law, where if you fail to meet any one of the three factors, the worker is an employee.
[Related: AB 5's latest: Why interstate trucking should be exempt]
