Department of Labor Delays Implementation of Independent Contractor Rule, Changes Likely  

On March 2, 2021, the U.S. Department of Labor (DOL) issued a notice to officially delay the effective date of the Independent Contractor Final Rule, from March 8, 2021 to May 7, 2021. This delay was widely anticipated; view the full DOL notice online. 

DOL states that the delay is “to allow the Department to review issues of law, policy and fact raised by the rule before it takes effect.” The DOL noted that “allowing more time for consideration of the Rule is reasonable given the significant and complex issues the Rule raises, including whether the Rule is consistent with the statutory intent to broadly cover workers as employees as well as the costs and benefits of the rule, including its effect on workers.”

The now-delayed Final Rule was published during the last two weeks of the Trump administration. The Rule addresses the question of who an independent contractor is, and therefore not an employee covered by the Fair Labor Standards Act. The Rule would generally make it easier for employers to classify a worker as an independent contractor. It sets forth an “economic dependence” test. The “economic dependence” standard focuses on five factors. Two of these are considered primary: (1) the nature and degree of the worker’s control over the work; and (2) the worker’s opportunity for profit or loss. If the first two factors are inconclusive, then three additional factors are considered: (1) the amount of skilled required; (2) the “degree of permanence” of the parties’ work relationship; and (3) whether the work is “part of an integrated unit of production.”

The Final Rule, as currently written, may be re-opened for an additional public comment period. The expectation is that, ultimately, the Department will revise the Rule to make it more difficult to classify workers as independent contractors.  NAMM will continue to monitor this important issue and will provide updates as they are available. Please visit this page regularly.