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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

Banking & Cannabis: The Next Frontier Webinar

September 23, 2021On Tuesday, September 21st, BMD’s own Banking and Cannabis Partner, Stephen Lenn, hosted a star-studded cast of panelists in a webinar titled Banking & Cannabis: Cannabis Lending, The Next Frontier. The webinar, which had to suspend registrations when hitting a maximum cap of 500, aimed to explore issues related to cannabis and banking, with a particular emphasis on lending. With the sponsorship and support of the Bankers Associations of Arizona, Colorado, Ohio and Utah, Steve was able to recruit an elite group of bankers, bank regulators, cannabis industry players, and cannabis regulators, who took the topic head on. The discussion kicked off with an opening from the keynote speaker, VP of Congressional Affairs for the American Bankers Association, Tanner Daniel.Client Alert

Is Your Bonus System Creating Wage and Hour Violations? A Hidden Impact of the Labor Shortages

September 22, 2021As employers struggle with attracting and retaining talent, many have turned to incentives such as Signing Bonuses and Retention Bonuses. In doing so, employers may be inadvertently exposing themselves to overtime law violations. Employers with non-exempt employees know that the Fair Labor Standards Act (FLSA) requires an overtime premium to non-exempt for work in excess of 40 hours per week. However, all too often, employers miscalculate the “regular rate” of pay, which is used for calculating the “overtime rate.” The miscalculation is becoming more prevalent in today’s market when employers fail to include supplemental compensation, such as certain Signing Bonuses and Retention Bonuses into the regular rate of pay. An example: A non-exempt employee is hired at a rate of $20 per hour, and also receives a retention bonus of $1,200 after working for 12 weeks. In her 11th week of work, employee works 50 hours. In her 14th week of work, employee works 50 hours. What is her paycheck in week 11? What is her paycheck in week 14?Client Alert

No Surprises Act – Notice Requirements

September 22, 2021On July 1, 2021, the Biden Administration passed an interim final rule: Part 1 of the “Requirements Related to Surprise Billing Act,” in an attempt to curb excessive costs patients are required to pay in relation to surprise billing. The rule is set to take affect January 1, 2022, and will only affect those who are enrolled in insurance via their employers, as federal healthcare programs already prohibit this type of billing.[1]Client Alert

El Contrato Escrito: La Herramienta Predilecta

July 23, 2021No 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.Client Alert

New State Budget Institutes Licensure Requirement for Ohio’s Hospitals

July 14, 2021On 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:
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