Department Of Labor Proposes New Independent Contractor Classification Rule
How can you know for certain whether you have been misclassified as an independent contractor when you should actually be entitled to the rights employees have under state and federal law? There are different tests that employers can use to determine whether a worker should be classified as an independent contractor or as an employee, and it can be confusing for a worker in the Columbus area to know if they have been properly classified.
What test should employers be using to classify employees? Employees in Ohio should learn more about tests and factors that are used to understand if they have been properly classified. In addition, employees should know that the U.S. Department of Labor (DOL) recently proposed a new rule for determining an employee’s classification. In its release, the DOL established their motive for the change, which ostensibly is to protect independent contractors, some of whom have been routinely misclassified by Employers seeking to exploit a weakness in the rule to avoid paying non-employees proper wages or overtime.
Background to the Newly Proposed Rule
In January 2021, the DOL issued guidance for the classification of independent contractors that identified five separate factors for employers to use as an “economic reality” test in order to determine whether a worker was an independent contractor or an employee. In that guidance, the DOL identified two of those factors as “core factors” that should carry the greatest amount of weight in an analysis of an employee’s classification. Those factors included, according to the DOL, “the nature and degree of control over the work, and the worker’s opportunity for profit or loss.”
However, as the DOL explains, the 2021 Rule “does not fully comport with the FLSA’s text and purpose as interpreted by courts,” and the DOL believes that it actually “departs from decades of case law applying the economic reality test.” Accordingly, the DOL has proposed rescinding the 2021 Rule and returning an economic reality test that sets forth As part of the new rule, the DOL would add Part 795 to Title 29 of the Code of Federal Regulations.
Details of the Proposed Rule
The proposed rule seeks to revive the totality-of-the-circumstances analysis of the economic reality test, where the factors do not have a predetermined weight and no factor is dispositive.
Under this new rule, th economic reality test, which courts have long used to define an employee under the FLSA, will have a refined focus on whether each factor shows the worker is economically dependent upon the employer for work versus being in business themself, but it will not use predetermined weighting of factors, rather considering the totality of the factors comprehensively instead of as discrete and unrelated.
Contact a Wage and Hour Law Attorney in Columbus
If you have any concerns about your classification as an independent contractor, it is important to talk with an attorney about your situation. If you were in fact misclassified as an independent contractor, you could be eligible to file a claim and likely recover unpaid wages, including overtime. The experienced Columbus wage and hour attorneys at the law firm of Brian G. Miller CO., L.P.A. can discuss the details of your case with you today.