Labor Department looks to officially define ‘independent contractor’

September 29, 2020

Labor Dept. aims to clarify federal ‘independent contractor’ definition
The Department of Labor’s Wage and Hour Division is proposing to better define independent contractor in the context of the Fair Labor Standards Act. That law has long governed employer wage and hour rules, such as minimum wage and overtime, and has defined employer/employee relationships for the purposes of applying those rules.

A new notice of proposed rulemaking would add a part to Title 29 of the Code of Federal Regulations. It would adopt interpretations to which courts and the DOL have long adhered when it comes to determining independent contractor status. It also would sharpen a multifactor economic-realities test into “five distinct factors,” and would shift greater weight in the determination to “actual practices” in independent contractor agreements as opposed to “what may be contractually or theoretically possible”.