The Department of Labor is holding two public forums this month regarding rulemaking on independent contractor verses employee status.
The department plans on engaging in rulemaking on how to classify workers as either an independent contractor or as an employee under the Fair Labor Standards Act. Misclassification of employees is one of the more serious problems affecting the economy as well as both employers and employees, says Jessica Looman, acting administrator for the Department of Labor's Wage and Hour Division, in a blog post.
"Lower pay caused by misclassification reduces workers’ purchasing power, which undermines the entire economy," Looman writes. "Meanwhile, employers who comply with the law are at a competitive disadvantage when competing against employers who misclassify employees and pay them less than the law requires and fail to provide other employment-based worker protections."
In January 2021, the department published a rule on the issue. This rule was delayed on March 4, 2021, and then withdrawn on May 6, 2021. A March 15, 2022 ruling reinstated the Trump-era independent contractor rule. The rule allows for the use of economic realities to determine the status of a subcontractor, such as the degree and nature of control exerted over the work and the permanence in the relationship between the individual and the potential employer.
Once a proposed rule is published in the Federal Register, there will be a notice and comment period allowing all parties an opportunity to review the proposal and provide written comments.