Nixon Peabody LLP

  • People
  • Capabilities
  • Insights
  • About

Trending Topics

    • People
    • Capabilities
    • Insights
    • About
    • Locations
    • Events
    • Careers
    • Alumni

    Practices

    View All

    • Affordable Housing
    • Community Development Finance
    • Corporate & Finance
    • Cybersecurity & Privacy
    • Environmental
    • Franchising & Distribution
    • Government Investigations & White Collar Defense
    • Healthcare
    • Intellectual Property
    • International Services
    • Labor & Employment
    • Litigation
    • Private Wealth & Advisory
    • Project Finance
    • Public Finance
    • Real Estate
    • Regulatory & Government Relations

    Industries

    View All

    • Cannabis
    • Consumer
    • Energy
    • Entertainment
    • Financial Services
    • Healthcare
    • Higher Education
    • Infrastructure
    • Manufacturing
    • Non Profit
    • Real Estate
    • Technology

    Value-Added Services

    View All

    • Alternative Fee Arrangements

      Developing innovative pricing structures and alternative fee agreement models that deliver additional value for our clients.

    • Continuing Education

      Advancing professional knowledge and offering credits for attorneys, staff and other professionals.

    • Crisis Advisory

      Helping clients respond correctly when a crisis occurs.

    • DEI Strategic Services

      Providing our clients with legal, strategic, and practical advice to make transformational changes in their organizations.

    • eDiscovery

      Leveraging law and technology to deliver sound solutions.

    • Global Services

      Delivering seamless service through partnerships across the globe.

    • Innovation

      Leveraging leading-edge technology to guide change and create seamless, collaborative experiences for clients and attorneys.

    • IPED

      Industry-leading conferences focused on affordable housing, tax credits, and more.

    • Legal Project Management

      Providing actionable information to support strategic decision-making.

    • Legally Green

      Teaming with clients to advance sustainable projects, mitigate the effects of climate change, and protect our planet.

    • Nixon Peabody Trust Company

      Offering a range of investment management and fiduciary services.

    • NP Capital Connector

      Bringing together companies and investors for tomorrow’s new deals.

    • NP Second Opinion

      Offering fresh insights on cases that are delayed, over budget, or off-target from the desired resolution.

    • NP Trial

      Courtroom-ready lawyers who can resolve disputes early on clients’ terms or prevail at trial before a judge or jury.

    • Social Impact

      Creating positive impact in our communities through increasing equity, access, and opportunity.

    1. Home
    2. Insights
    3. Alerts
    4. DOL proposes new rule for determining independent contractor status under the FLSAAlerts

    Alert / Labor & Employment

    DOL proposes new rule for determining independent contractor status under the FLSA

    Oct 13, 2022

    Share

    By Jessica Jewell and Christopher Moro

    The DOL publishes its Notice of Proposed Rulemaking on independent contractors today, October 13, 2022.

    What’s the impact?

    • The DOL aims to clarify the test for determining whether an individual is an employee or independent contractor under the FLSA.
    • The DOL is seeking to reinstate Obama-era guidance that the Trump administration rescinded in January 2021.
    • There has been some confusion about what rule applies. Employers should prepare for the possibility that the DOL’s rule could take effect as proposed.

    DOWNLOADS

    • PDF: DOL proposes new rule under FLSA

    On October 11, 2022, the United States Department of Labor (DOL) announced that it would publish a Notice of Proposed Rulemaking on October 13, 2022, clarifying the test that should be applied to determine whether an individual is an employee or independent contractor under the Fair Labor Standards Act (FLSA), which lays out federal minimum wage and overtime rules.

    The DOL intends to adopt the longstanding “economic realities test.” Under this test, “[t]he ultimate inquiry is whether, as a matter of economic reality, the worker is either economically dependent on the employer for work (and is thus an employee) or is in business for themselves (and is thus an independent contractor).” This determination will require a “totality-of-the-circumstances analysis,” which weighs the following factors equally:

    • Worker’s opportunity for profit and loss depending on managerial skill
    • Investments by the worker and the employer
    • Degree of permanence of the work relationship
    • Nature and degree of control
    • Extent to which the work performed is an integral part of the employer’s business
    • Skill and initiative required for the work
    • Any additional factors which may indicate whether an individual is “economically dependent on this employer for work or in business for themselves”

    This “new” rule may sound like déjà vu to employers. That’s because the DOL seeks to reinstate an Obama-era interpretation rescinded last year via the Trump administration’s January 2021 “Independent Contractor Status Under the Fair Labor Standards Act” (2021 IC Rule). Although the 2021 IC Rule identified five “economic reality” factors similar to those listed above, it emphasized the first two of those five factors—the degree of control over the work and the worker’s opportunity for profit or loss. The 2021 IC Rule was viewed as friendlier to employers because of the focus on these two “core factors.” However, before the 2021 IC Rule became effective, the Biden DOL delayed its effective date and attempted to withdraw the Trump rule. Ongoing litigation has caused some confusion about the status of the 2021 IC Rule and what test applies. In light of this confusion, the DOL is now officially rescinding the 2021 IC Rule, noting that the current “analysis for determining employee or independent contractor status under the [FLSA]... is more consistent with existing judicial precedent and the [DOL’s] longstanding guidance prior to the 2021 IC Rule.”

    The DOL is accepting comments regarding this proposed rule from October 13, 2022, to November 28, 2022. Nixon Peabody will monitor any future developments with respect to the proposed rule and report on any changes made in response to comments from stakeholders.

    Employers should prepare for the possibility that the DOL’s rule could take effect as proposed, making each of the above-listed factors equally relevant when determining whether an individual is an employee or an independent contractor. It is advisable for employers to review their agreements with independent contractors to ensure they are properly classified based on the factors outlined above. Employers should also be mindful that, although this rule addresses independent contractor status under the FLSA, states may employ different tests to address whether an individual is properly classified as an independent contractor.

    Practices

    Labor & EmploymentLabor Relations

    Insights And Happenings

    • Alert

      Speak Out: Congress passes bill limiting use of NDAs

      Nov 22, 2022
    • Alert

      Why you need to pay attention to NY's Adult Survivors Act, taking effect next week

      Nov 15, 2022
    • Alert

      California employment laws — What’s new in 2023?

      Oct 18, 2022

    Subscribe to stay informed of the latest legal news, alerts, and business trends.Subscribe

    • People
    • Capabilities
    • Insights
    • About
    • Locations
    • Events
    • Careers
    • Alumni
    • © 2023 Nixon Peabody. All rights reserved
    • Privacy Policy
    • Terms of Use
    • Statement of Client Rights
    • Supplier Diversity Program
    • Nixon Peabody International LLC
    • PAL