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DOL Finalizes New Rule Regarding Independent Contractor Status, But Its Future Is In Jeopardy

Client Alert
January 11, 2021

On January 6, 2021, the Department of Labor announced its final rule regarding independent contractor status under the Fair Labor Standards Act. As described in a prior BMD client alert, this new rule was fast-tracked by the Trump administration after its proposal in September 2020. The new rule is set to take effect on March 8, 2021, and contains several key developments related to the "economic reality" test used to determine whether an individual is an independent contractor or an employee under the FLSA.

The new rule represents a more employer-friendly approach, intended to be more precise and predictable than the existing multifactor balancing test.

  • This new approach to the economic reality test considers whether a worker is in business for themselves or is economically dependent on the putative employer by looking at five distinct factors.     
  • Two core factors are given greater weight in determining whether or not the worker is economically dependent: the nature and degree of the worker's control over the work, and the worker’s opportunity for profit or loss based on initiative and/or investment.
  • Three other factors may also contribute to the analysis, including the amount of skill required for the work, the degree of permanence of the working relationship, and whether the work is part of an integrated unit of production.
  • The final rule prioritizes analysis of actual practices over what is theoretically possible in determining whether a worker is an employee or an independent contractor.

However, this rule is likely in immediate jeopardy as Democrats are set to control all three branches of government in the coming weeks. The United States Department of Labor is a cabinet-level department and the appointees to lead those departments will not face the check of a Republican controlled Senate. Although the DOL moved quickly enough to finalize the rule before Biden takes office, because the rule’s effective date falls after the transition, the new administration may be able to delay the effective date of the rule by up to 60 days. During this postponement, the Biden administration could seek to propose a new rule or repeal the Trump administration rule through the administrative rule-making process.

In addition, the results of the senatorial elections in Georgia have great significance for recently finalized rules. The Congressional Review Act gives Congress the power to halt rules shortly after they become final, through a congressional resolution of disapproval. Because Democrats will soon control the House, Senate, and Presidency, they will likely have a window of opportunity to nix the DOL’s newly finalized independent contractor rule.  

The BMD Employment and Labor Law Practice Group will keep you updated as further developments arise, and we are available to assist if you have questions regarding independent contractor status under the FLSA.

Employment LawLabor LawRussell T. RendallIndependent ContractorU.S. Department of Labor
Client Alert

Supreme Court Rules that Employers Must Show Substantial Increased Costs to Legally Decline Employees’ Religious Accommodation Requests

June 29, 2023On June 29, 2023, the Supreme Court ruled in Groff v. DeJoy that under Title VII of the Civil Rights Act of 1964 (“Title VII”) employers must show, in order to decline religious accommodations, that the burden of granting religious accommodations to employees will result in substantial increased costs in relation to the conduct of an employer’s particular business, thus amending the prior, simple standard of a “de minimis” undue hardship.Client Alert

Recent HIPAA Breach Settlements - Lessons Learned

June 19, 2023According to the U.S. Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR), the consequences for providers may include settlements of $30,000 to $240,000. OCR recently released two settlements for improper breaches of protected health information (PHI) that are good examples of the major monetary penalties that can result from common HIPAA mistakes.Client Alert

Supreme Court Issues Major False Claims Act Decision

June 5, 2023Client Alert

Telehealth Flexibility Updates: HIPAA, DEA, and CMS

May 12, 2023The Covid-19 Public Health Emergency (PHE) officially ended on May 11, 2023. But what does that mean for telehealth, a field that expanded exponentially during the PHE? Fortunately, many of the flexibilities will remain intact, at least temporarily. This client alert presents a brief overview of the timelines that providers need to follow, but for a more comprehensive review of telehealth flexibilities and when they will endClient Alert, Multimedia

WEBINAR SERIES RECAP | Ending the Public Health Emergency + Post-Pandemic Check-Up

May 10, 2023Some may take the position that the rest of the country already returned to a new “normal” following the COVID-19 pandemic.  But healthcare providers continue to implement COVID protocols and navigate the ever-changing healthcare regulations at both the federal and state levels.  It is important for healthcare providers to take time for a “Healthcare Check-Up” with the start of 2023 and the ending of the Public Health Emergency (“PHE”).
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