Feds Seek to Overhaul Independent Contractor, Joint Employer Rules
The U.S. Department of Labor (DOL) announced that it intends to withdraw the independent contractor final rule issued on Jan. 7, 2021, and rescind a current rule on joint employer relationships under the Fair Labor Standards Act (FLSA) which took effect on March 16, 2020.
NAHB is deeply disappointed in DOL's decision to withdraw and rescind these two rules. We support both rules, believing they are improvements over prior interpretations and provide more clarity for the residential construction industry.
DOL said it is seeking to withdraw the final independent contractor rule for the following reasons:
- The rule adopted a new "economic reality" test to determine whether a worker is an employee or an independent contractor under the FLSA.
- Courts and the department have not used the new economic reality test, and FLSA text or longstanding case law does not support the test.
- The rule would narrow or minimize other factors considered by courts traditionally; making the economic test less likely to establish that a worker is an employee under the FLSA.