The Trump Administration issued a federal regulation making it easier for businesses to classify workers as independent contractors. While the Trump regulation listed five factors for consideration, the two given the far greatest weight were the nature and degree of the worker's control over the work, and the worker's opportunity for profit or loss based on personal initiative or investment. The final rule issued by the Biden Administration in early May rescinded this regulation.
While the Biden Administration did not replace the Trump regulation, Acting Wage and Hour Division Administrator Jessica Looman told reporters in an agency-arranged conference call how the Department of Labor (DOL) will handle enforcement efforts on the issue of classifying workers as employees or independent contractors. In general, she indicated that the Biden Administration will rely on a long-standing multi-factor test. She cited DOL Guidance from 2008 that outlined a seven-factor "economic realities" test. Among other things, there will be an examination of whether the work performed is "an integral part" of the business, and the worker's "degree of independent business organization and operation." Looman did not foreclose the possibility that DOL could release new guidance or a regulation on employee status in the future.
This is part of our June 2021 Newsletter.
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