The U.S. Department of Labor Wage and Hour Division has proposed a rule that would determine whether a worker is an independent contractor under the Fair Labor Standards Act, which requires payment of minimum wage and overtime pay.
DEADLINE EXTENION NOTICE: NAMM urges all affected members to submit comments on how this will impact their businesses by the December 13, 2022, deadline.
The proposed rule would rescind a prior Trump Administration rule which adopted an "economic reality" test focused on just two core factors: control and profit. The Department of Labor now proposes a new "economic reality" test that requires an analysis of multiple factors, including:
- the opportunity for profit or loss depending on managerial skill
- investments by the worker and employer
- the degree of permanence of the work relationship
- the nature and degree of employer control
- the extent to which the work performed is an integral part of the employer's business, and
- the worker's use of skill and initiative
Depending on the outcome of the rulemaking proceeding, many NAMM members may find it more difficult to classify individuals such as music teachers and some repair personnel as independent contractors instead of employees.