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DOL Proposes New Rule Regarding Independent Contractor Status - But How Will the Election Affect Its Future?

Client Alert
September 24, 2020

On September 22, 2020, the U.S. Department of Labor announced a new proposed rule regarding employee and independent contractor status under the Fair Labor Standards Act. The full text of the proposed rule is available here. The rule's drafters intend to reduce uncertainty and enhance the precision and predictability of the long-standing "economic reality" test, which currently relies on a multifactor balancing test. The proposed rule contains the following developments:

  • It sets forth a new approach to the economic reality test, which 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 would be 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 proposed rule emphasizes that actual practices are more relevant to the analysis than what is theoretically possible in determining whether a worker is an employee or an independent contractor.

This proposed rule would supplant the various approaches to the economic reality test that have evolved in federal courts, the DOL's subregulatory guidance, and industry-specific regulations. It's worth noting that the outcome of the November election could affect the future of this proposed rule. The rule is generally perceived as more business-friendly, and the Trump administration is seeking to fast track this rule for finalization before January 20, 2021. But if it is unable to do so, and Biden defeats Trump, the proposed rule would likely be in jeopardy. Or if Democrats flip the Senate the rule could potentially be undone by Congressional action.

The comment period has not yet begun, but the public will have 30 days to comment on the proposed regulation once it has been published in the Federal Register. The Employment and Labor team at Brennan Manna Diamond is available to assist if you would like to submit a comment regarding this proposed rule.

For more information, please contact Russell Rendall at 216.658.2205 or rtrendall@bmdllc.com. 

DOLU.S. Department of Laboremployee and independent contractor statusFair Labor Standards Acteconomic reality testemployeesIndependent ContractoremployersTrump administrationBiden2020 electioncongressional actionRussell T. Rendallemployment lawproposed rule
Client 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”).Client Alert

Sharp Rise in False Claims Act Cases - Navigating the FCA Waters

May 5, 2023Recently, on April 18, 2023, the United States Supreme Court heard arguments regarding the FCA’s scienter, or mental state, requirement. To prove violation of the FCA, the statute requires that a defendant “knowingly” file false claims for payment. The term “knowingly” is defined within the statute to mean a person that acts with actual knowledge, deliberate ignorance, or reckless disregard. Circuit courts are split on how to interpret and apply the knowledge element of the FCA, and based on the Supreme Court’s decision, there will be a large impact on healthcare defendants and their businesses as well as anyone who contracts with, or receives money from, a federal program. A broader interpretation of the FCA would unnecessarily target and stifle healthcare, and other businesses, for simple errors in daily operations. This goes against the intended application of the FCA, which was to prevent fraudulent activity.Client Alert

Areas of Opportunity in Columbus: Highlights from the Columbus Opportunity Summit

May 5, 2023On April 27, 2023 Columbus Business First held its annual Columbus Opportunity Summit, bringing together business and economic development leaders to provide an update on how Central Ohio is preparing for expected growth in the coming years, an issue heightened by the arrival of Intel at its 1,000 acre site in Licking County, just outside of Columbus. The site will be home to two new chip factories with room to grow to a total of eight factories and is a $20 Billion investment.Client Alert

BREAKING: Biden Administration Has Officially Ended the Two Remaining COVID Vaccine Mandates

May 2, 2023As of May 1, 2023, the Biden Administration has officially ended the two remaining COVID vaccine mandates: (1) the Federal Contractor Mandate, and (2) the CMS Healthcare Provider Vaccine Mandate.
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