Department of Labor Releases Final Independent Contractor Rule
The U.S. Department of Labor (DOL) announced a final rule clarifying the definition of employee under the Fair Labor Standards Act (FLSA) as it relates to independent contractors. While the rule will make it easier for businesses to classify workers as independent contractors, it is still unclear if it will ultimately be implemented by the incoming Biden administration.
The final rule would provide more clarity to employers in determining whether a worker is an independent contractor or an employee under the FLSA. NAHB has called on DOL to take steps to provide greater clarity to employers and workers in light of the often conflicting federal tests that exist, and has urged further action to harmonize the definition of “employee” across all relevant statutes.
NAHB is pleased that at our request the new rule includes specific examples of how it would relate to the construction industry.
Though the rule is intended to take effect 60 days after it is published in the Federal Register, the DOL under the new Biden administration could delay the effective date and support legal challenges to keep the rule from being implemented.
The DOL’s final independent contractor rule as issued today still relies on an economic realities test to determine employment status, but adopts a more streamlined five-factor approach.
Two “core factors” are given greater weight in making this determination -- the nature and degree of the employer’s control over the work, and the worker’s opportunity for profit or loss based on personal initiative and/or investment. These factors help determine if a worker is economically dependent on someone else’s business or is in business for himself or herself.
The three other factors that may serve as additional guideposts in the analysis are the amount of skill required for the work; the degree of permanence of the working relationship between the worker and the potential employer; and whether the work is part of an integrated unit of production.
The final rule will be published in the Federal Register on Jan. 7 and be effective on March 8, 2021.
For more information contact NAHB’s David Jaffe at 800-368-5242 x8317 or Alexis Moch at x8407.
Latest from NAHBNow
Jun 10, 2025
NAHB Urges HUD Secretary to Keep and Fully Fund Key Housing ProgramsNAHB sent a letter to Housing and Urban Development (HUD) Secretary Scott Turner on June 4 underscoring the important role that HUD’s rental assistance and new construction programs play in making housing opportunities available for low-to moderate-income Americans.
Jun 10, 2025
New Study Reveals Significant Economic Impact of Housing Industry Labor ShortageA landmark study released today from the Home Builders Institute (HBI), in collaboration with NAHB, examines the economic impact of the skilled labor shortage for the single-family home building sector. The findings indicate that the skilled labor shortage’s impact on the residential construction industry is a multibillion-dollar annual challenge that is responsible for the lost production of thousands of newly built homes.
Latest Economic News
Jun 10, 2025
House Price Appreciation by State and Metro Area: First Quarter 2025House price growth slowed in the first quarter of 2025, partly due to a decline in demand and an increase in supply. Persistent high mortgage rates and increased inventory combined to ease upward pressure on house prices. These factors signaled a cooling market, following rapid gains seen in previous years.
Jun 09, 2025
AI’s Role in Reshaping Employment: From Theory to Home Building Sector ImpactsThe rapid rise of artificial intelligence (AI), particularly machine learning and generative AI (GenAI), is reshaping industries, creating new economic opportunities, and raising critical questions about its long-term impact on jobs and economic growth.
Jun 06, 2025
U.S. Economy Added 139,000 Jobs in MayDespite ongoing economic and policy uncertainty, the labor market remains resilient, though early signs of softening are beginning to emerge. Job growth moderated in May, and employment figures for March and April were notably revised downward. The unemployment rate remained at 4.2%.