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
Jul 24, 2026
Latest Tariff Actions Add Uncertainty to Housing MarketRecent tariff developments could create more uncertainty for home builders over building material supply chains and pricing.
Jul 24, 2026
New Home Sales Edge Higher as Affordability Challenges PersistSales of newly built single-family home rose 1.6% in June to a seasonally adjusted annual rate of 628,000, up from an upwardly revised May estimate, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales is down 5.6% from a year earlier.
Latest Economic News
Jul 24, 2026
New Home Sales Edge Higher as Affordability Challenges PersistAffordability challenges continued to weigh on the new-home market in June, as elevated mortgage rates, rising inflation and broader economic uncertainty kept many prospective buyers on the sidelines.
Jul 23, 2026
Acquisitions Increasing Among Home BuildersAt the start of 2026, most home builders predicted that high mortgage rates and hesitancy among buyers would be their toughest challenges this year. They weren’t wrong: the 30-year mortgage rate averaged 6.49% in June and housing demand has weakened, as reflected by flat mortgage applications in the first half of the year.
Jul 22, 2026
What Do Home Buyers Purchase After They Move InBuying a home typically generates a wave of consumer spending beyond the purchase of the home itself. Following a home purchase, households often buy appliances and furnishings and undertake remodeling and repair projects to make the home fit their needs and preferences.