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The U.S. Department of Labor (“DOL”) announced today that it will publish a Notice of Proposed Rulemaking on October 13, 2022, in order “to help employers and workers determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act.”  This marks the Biden Administration’s second attempt to rescind the pro-business independent contractor rule promulgated by the Trump Administration.

The proposed rule would require that workers who are “economically dependent” on the companies for which they perform work be treated as employees instead of independent contractors, making them eligible for minimum wage and overtime and exposing companies to tax liabilities and other legal requirements.  The DOL framed the “ultimate inquiry” under the decades-old economic reality test as “whether, as a matter of economic reality, the worker is either economically dependent on the employer for work (and is thus an employee) or is in business for themselves (and is thus an independent contractor).”

In determining whether a worker is “economically dependent” under the proposed rule, the DOL said it will consider factors such as a worker’s “opportunity for profit or loss, investment, permanency, the degree of control by the employer over the worker, whether the work is an integral part of the employer’s business, and skill and initiative,” with no single factor weighing more heavily than another.  This is a departure from the Trump era rule identifying five economic reality factors and designating the nature and degree of control over the work and the worker’s opportunity for profit and loss as “core factors” carrying the greatest weight in the independent contractor analysis.

The final rule, which is expected next year, would have a significant impact on companies that rely on the contractor business model.

Contact our employment law team for help navigating the implications of the proposed rule or other questions concerning worker classification.

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Photo of Courtney Turkington Courtney Turkington

Courtney Turkington is a member of the firm’s Commercial Litigation group in New Orleans. She received her Juris Doctor, summa cum laude, from Loyola University New Orleans College of Law in 2018.

Prior to joining the firm, Courtney served as a law…

Courtney Turkington is a member of the firm’s Commercial Litigation group in New Orleans. She received her Juris Doctor, summa cum laude, from Loyola University New Orleans College of Law in 2018.

Prior to joining the firm, Courtney served as a law clerk to the Honorable Carl J. Barbier of the United States District Court for the Eastern District of Louisiana, and a judicial extern to the Honorable Ivan L.R. Lemelle of the United States District Court for the Eastern District of Louisiana.

Photo of Kindall C. James Kindall C. James

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Kindall James is a labor and employment lawyer who helps her clients resolve difficult HR and personnel issues that run the gamut from employees sending inappropriate emails, text messages, and strange pictures to one another, to more serious issues involving workplace violence and threats.  She counsels employers, business owners and managers, and defends them in a wide variety of employment-related disputes in the state and federal courts of Texas and Louisiana.  This includes defending employers against claims under the Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act (ADA), ERISA, and other federal and state laws. Kindall also handles claims involving non-compete agreements, trade secrets, and unfair trade practices and competition.

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Tommy is the leader of the firm’s commercial litigation practice group and a member of the firm’s Board of Directors. He is a go-to labor and employment lawyer with experience throughout Louisiana and the U.S. With his nearly 35 years of experience, he helps employers across a wide range of industries with contentious human resources claims and issues, both inside and outside the courtroom. Most recently, he has guided employers through a range of concerns related to the COVID-19 pandemic.