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DOL announces final independent contractor classification rule

The US Department of Labor today announced a final rule clarifying the standard for employee versus independent contractor status under the Fair Labor Standards Act (FLSA).

The rule will take effect March 8. However, President-elect Joe Biden has signaled he will block regulations that have not yet taken effect; incoming White House Press Secretary Jen Psaki said the move will curb “midnight” regulations [1] and actions and cited the independent contractor rule as an example.

“This rule brings long-needed clarity for American workers and employers,” said US Secretary of Labor Eugene Scalia. “Sharpening the test to determine who is an independent contractor under the Fair Labor Standards Act makes it easier to identify employees covered by the Act, while recognizing and respecting the entrepreneurial spirit of workers who choose to pursue the freedom associated with being an independent contractor.”

The DOL proposed the rule [2] in September to clarify who is an employee and who is an independent contractor under the Fair Labor Standards Act. It allotted a 30-day window for public comments rather than the usual 60-day period given. The agency received 1,500 comments [3] on the proposal and in October a group of 24 attorneys general   to Labor Secretary Eugene Scalia opposing the rule, saying it would increase the misclassification of workers.

The final rule includes the following clarifications: