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 04, 2026
Highest Paid Occupations in Construction in 2025The median wage of payroll workers in construction was $61,370 in 2025, with the top 25% earning at least $83,480. In comparison, the U.S. median annual wage was $50,980, while the highest paid 25% earned at least $80,520.
Jun 03, 2026
Top OSHA Violations of 2025; No Increase in Penalties for 2026In 2025, improper fall protection was once again the most-cited violation of OSHA jobsite rules. A failure to protect against falls also featured prominently in three other violations in the top 10.
Latest Economic News
Jun 03, 2026
House Price Appreciation by State and Metro Area in the First Quarter of 2026U.S. house prices continued to rise in the first quarter of 2026, but appreciation slowed markedly from the rapid pace seen during the pandemic-era housing boom.
Jun 03, 2026
State-Level Employment Situation: April 2026State labor market conditions remained generally positive in April, with most states recording employment gains despite signs of moderating national job growth.
Jun 02, 2026
Slight Increase for Construction Job OpeningsThe number of open positions in the construction sector edged higher in April, per the Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS).