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The Department of Labor is proposing a regulation for determining independent contractor status under the Fair Labor Standards Act.

Statement of Need:

The Department believes that the multifactor economic reality test presently used in determining independent contractor status would benefit from additional clarity because of the way courts have evolved from the text and Supreme Court precedent.  The existing test assesses workers’ economic dependence on a potential employer and, as often articulated by courts and the Department, raises the following concerns: (1) the core concept of economic dependence remains vague and under-developed; (2) the test lacks guidance about how to balance the multiple factors; and (3) the lines between many of the factors are blurred.  These shortcomings have become more apparent in the modern economy.

Summary of the Legal Basis:

The proposed regulation would be authorized by the Fair Labor Standards Act, 29 U.S.C. 201-219; Reorganization Plan No. 6 of 1950; and Secretary’s Order 01-2014 (December 19, 2014), 79 FR 77527. The proposed regulation would constitute the official interpretation of the Department with respect to independent contractor status under the Act.

Alternatives:

The Department will examine regulatory alternatives as part of the NPRM.

Anticipated Costs and Benefits:

The Department will prepare estimates of the anticipated costs and benefits associated with the proposed rule.

Risks:

This action does not affect public health, safety, or the environment.