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

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.

El Contrato Escrito: La Herramienta Predilecta

No existe mejor herramienta a una disputa contractual que un documento firmado por las partes en el cual se expongan las obligaciones y acuerdos entre éstas.

New State Budget Institutes Licensure Requirement for Ohio’s Hospitals

On July 1, 2021, Governor Mike DeWine signed Ohio’s final budget codified at Ohio Revised Code 3722.01 et seq., which includes a new licensing requirement for Ohio’s hospitals. For years, Ohio was the only state in the country that did not license its hospitals. This approach will now be replaced with new, detailed requirements that will require careful review and compliance. Here are some of the highlights concerning these new changes:

Healthcare Provisions in the Ohio FY 22-23 Budget

Governor Mike DeWine signed Ohio’s Fiscal Year 2022-2023 budget bill (HB 110) into law on July 1, 2021. At almost 1,000 pages and 74.1 billion dollars, the budget lays out the State’s spending for the next two years. Below are a few highlighted provisions from the budget that will be important for the healthcare industry in Ohio

Interim Final Rule for Surprise Billing

In an effort to implement the new bipartisan No Surprises Act, on July 1, 2021, the Department of Health and Human Services (HHS), along with the Departments of Labor and Treasury, issued an interim final rule to safeguard patients against unforeseen medical bills arising from out-of-network care.

President Biden Seeks to Limit Non-Compete Agreements

Today, President Biden announced he would issue an Executive Order that calls on the Federal Trade Commission (FTC) to adopt rules to curtail worker non-compete agreements. Interestingly, a week ago, the FTC approved changes to its Rules of Practice to modernize and expedite the way it issues Trade Regulation Rules. If you have followed our alerts, we predicted the elimination of non-competes would probably happen. In 2016, then-Vice President Biden was a vocal opponent against non-compete agreements. He led the Obama administration’s initiative seeking to limit or eliminate non-compete agreements. In his presidential campaign, Biden promised to “work with Congress to eliminate all non-compete agreements, except the very few that are absolutely necessary to protect a narrowly defined category of trade secrets . . ..”