Department of Labor Withdraws Final Independent Contractor Rule

The Department of Labor (DOL) announced today it is withdrawing the independent contractor rule that was finalized in January during the waning days of the Trump administration. In doing so, it will revert to its pre-rule economic realities test where no one factor is determinate of independent contractor status.

NAHB submitted comments opposing the withdrawal and believes the final independent contractor rule represented a positive step forward that would provide more clarity for employers to determine whether a worker is an independent contractor or an employee under the Fair Labor Standards Act (FLSA).

In making the announcement to withdraw the rule, the DOL cited the reasons:

• The independent contractor rule was in tension with the FLSA's text and purpose, as well as relevant judicial precedent.
• The rule's prioritization of two "core factors" for determining employee status under the FLSA would have undermined the longstanding balancing approach of the economic realities test and court decisions requiring a review of the totality of the circumstances related to the employment relationship.
• The rule would have narrowed the facts and considerations comprising the analysis whether a worker is an employee or an independent contractor, resulting in workers losing FLSA protections.

Read NAHB's comment letter.

For more information, contact Alexis Moch or David Jaffe.