2027 IBS Registration Open
 
Register by Sept. 30 to lock in the best deals: Register now
 

Department of Labor Releases Final Independent Contractor Rule

Labor
Published

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.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Advocacy | Economics | Membership | IBS
Sep 03, 2026
Podcast: Challenges Ahead for Housing and Congress

On the latest episode of NAHB’s podcast, Housing Developments, CEO Jim Tobin and COO Paul Lopez highlight major issues impacting the residential construction industry — including immigration, gas bans and tariffs — and key upcoming events.

Safety
Sep 03, 2026
Jobsite Safety is Falling Behind at Smaller Home Builders, But Can Improve

According to a new academic study, small residential construction firms account for a disproportionate number of annual construction fatalities, but opportunities exist to improve jobsite safety through more deliberate communication and safety buffers.

View all

Latest Economic News

Economics
Sep 02, 2026
House Price Appreciation by State and Metro Area in the Second Quarter of 2026

U.S. house prices continued to rise in the second quarter of 2026, with most states and metropolitan areas recording annual gains. Elevated borrowing costs and affordability constraints remained important headwinds, while limited housing supply continued to support prices in many markets, particularly across parts of the Midwest and Northeast.

Economics
Sep 01, 2026
Number of Open Construction Sector Positions Rising

The number of open positions in the construction sector increased in July per the Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS). The current level of open jobs is down from three years ago due to declines in construction activity, particularly in housing.

Economics
Sep 01, 2026
HBGI Q2 2026: Single-Family Construction Contracts Broadly While Multifamily Expands

Home building trends diverged across geographies in the second quarter of 2026. According to the Home Building Geography Index (HBGI), single-family construction declined in nearly all geographic categories, although the contraction eased in most markets from the first quarter.