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
Aug 29, 2025
NAHB's Monthly Update Features Canadian Lumber Duties Talking PointsThe update provides the latest messaging framework to help members articulate housing priorities and latest news related to the Canadian lumber imports and builder sentiment.
Aug 28, 2025
Podcast: Congressional Priorities and the Trump Economy Heading into FallOn the latest episode of NAHB podcast Housing Developments, NAHB CEO Jim Tobin and COO Paul Lopez discuss how the rest of the year looks as Congress gets ready to return to Washington next week.
Latest Economic News
Aug 29, 2025
Multifamily Absorption Rises in the Second QuarterThe percentage of new apartment units that were absorbed within three months after completion rose in the second quarter, according to the Census Bureau’s latest release of the Survey of Market Absorption of New Multifamily Units (SOMA).
Aug 28, 2025
Mortgage Rates Move Lower, Hitting 10-Month LowAverage mortgage rates in August continued their steady decline and are now at their lowest rate since last November.
Aug 27, 2025
Wood-Framed Home Share Increased in 2024Wood framing continues to dominate the U.S. single-family home construction market, according to NAHB analysis of 2024 Census Bureau data.