In a move that no one saw coming, the Biden DOL plans to 86 the joint employer and proposed independent contractor rules

Oh, how embarrassing! Let me fix that blog post title.

In a move that no one anyone with half a brain or a faint pulse saw coming, the Biden DOL will eliminate the joint employer and proposed independent contractor rules.

There, that’s better.

Remind me, Eric. What was the proposed independent contractor rule again?

On January 6, the Department of Labor reaffirmed an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (Fair Labor Standards Act employee). Specifically, the DOL identified two “core factors” that are most probative on this issue: (1) The nature and degree of control over the work; and (2) The worker’s opportunity for profit or loss based on initiative and/or investment.

Additionally, the DOL identified three other factors that may serve as additional guideposts in the analysis, particularly when the two core factors do not point to the same classification. The factors are:

    1. The amount of skill required for the work.
    2. The degree of permanence of the working relationship between the worker and the potential employer.
    3. Whether the work is part of an integrated unit of production.

The DOL also provided a series of examples to show how these rules applied in real life, one of which involved a gig economy worker whom the DOL considered an independent contractor.

And the DOL doesn’t like this proposal anymore because…

According to this press release, the DOL and courts don’t use the new economic reality test. Neither FLSA text nor longstanding case law supports the test either. Plus, 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.”

The DOL wants to make it easier for individuals to be employees. Employees get minimum wage, overtime, and other protections under the FLSA. Independent contractors get nada.

For what it’s worth, even if the new rule had become final, many states have more restrictive tests that favor an employee-employer relationship. So, your mileage might vary anyway.

Now, what about this joint-employer rule?

Last March, a DOL regulation took effect, which helped determine joint-employer status when an employee performs work for his or her employer that simultaneously benefits another individual or entity, including guidance on the identification of certain factors that are not relevant when determining joint-employer status.

Long story short: Joint employers are both on the hook for wage and hour compliance matters like FLSA and FMLA, and the DOL rule made it less likely that two businesses like a fast-food franchisee and franchisor, for example, would be considered joint employers.

Or, as the current DOL says, “Removing a standard for joint employment that may be unduly narrow would protect more workers’ wages and improve their well-being and economic security.”

The DOL invites comments from the public on both proposed rules at The comment periods end on April 12, 2021.

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