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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

A Win for the Hospitals: An Update on the Latest 340B Lawsuit

June 16, 2022On Wednesday, the Supreme Court unanimously rejected massive payment cuts to hospitals under the 340B drug discount program. Now, the Department of Health and Human Services no longer has the discretion to change 340B reimbursement rates without gathering data on what hospitals actually pay for outpatient drugs. This “straightforward” ruling was based on the text and structure of the statute, per the Supreme Court. Simply put, because HHS did not conduct a survey of hospitals’ acquisition costs, HHS acted unlawfully by reducing the reimbursement rates for 340B hospitals.Client Alert

New Office of Environmental Justice Announced

June 9, 2022The profound impacts of climate change, combined with environmental and industrial pollutions, have led the U.S. Department of Health and Human Services (HHS) to establish the Office of Environmental Justice (OEJ). The creation of OEJ aligns with President Biden’s Executive Order Tackling the Climate Crisis at Home and Abroad. The OEJ will be led by Sharunda Buchanan, a former official for the Center for Disease Control and Prevention and will target disadvantaged communities around the country in hopes of improving the health of those populations and preventing future harm.Client Alert

New York, Kansas, Massachusetts, and Delaware Become the latest States to Adopt Full Practice Authority for Nurse Practitioners

May 19, 2022While the COVID-19 pandemic certainly created many obstacles and hardships, it also created many opportunities to try doing things differently. This can be seen in the instant rise of remote work opportunities, telehealth visits, and virtual meetings. Many States took the challenges of the pandemic and turned them into an opportunity to adjust the regulations governing licensed professionals, including for advanced practice registered nurses (APRNs).Client Alert, Blog Post

Explosive Growth in Pot of Gold Opportunity for Bank (and Other) Cannabis Lenders Driving Erosion of the Barriers

May 13, 2022Our original article on bank lending to the cannabis industry anticipated that the convergence of interest between banks and the cannabis industry would draw more and larger banks to the industry. Banks were awash in liquidity with limited deployment options, while bankable cannabis businesses had rapidly growing needs for more and lower cost credit. Since then, the pot of gold opportunity for banks to lend into the cannabis industry has grown exponentially due to a combination of market constraints on equity causing a dramatic shift to debt and the ever-increasing capital needs of one of the country’s fastest growing industries. At the same time, hurdles to entry of new banks are being systematically cleared as the yellow brick road to the cannabis industry’s access to the financial markets is being paved, brick by brick, by the progressively increasing number and size of banks that are now entering the market.Client Alert

2021 EEOC Charge Statistics: Retaliation & Impact of Remote Work

May 11, 2022The U.S. Equal Employment Opportunity Commission (EEOC) released its detailed information on workplace discrimination charges it received in 2021. Unsurprisingly, for the second year in a row, the total number of charges decreased as COVID-19 either shut down workplaces or disconnected employees from each other. In 2021, the agency received a total of approximately 61,000 workplace discrimination charges - the fewest in 25 years by a wide margin. For reference, the agency received over 67,000 charges in 2020, and averaged almost 90,000 charges per year over the previous 10 years.
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