Advocacy News — Dec. 8, 2022
The U.S. Department of Labor (DOL) is proposing a new regulation to determine whether someone should be classified as an “independent contractor” or an “employee” under the Fair Labor Standards Act (FSLA).
The Proposed Rule (RIN 1235-AA43) would force businesses to rely on the subjective “totality-of-the-circumstances” analysis, which considers an array of factors, none carrying more weight than others, to determine worker classification. This could bring about increased litigation and inconsistent results in the courts.
Why does this matter?
The Proposed Rule would replace the regulation that went into effect in March of 2021, which allows businesses and workers to structure mutually beneficial relationships that reflect the modern workplace and provides clarity, uniformity and simplicity to businesses using independent contractors (ICs).
The Proposed Rule is heavily biased toward concluding that someone should be considered an employee. If an employer determines a worker should be classified as an independent contractor (IC), the employer will not be as confident that classification will be correct until the DOL approves it. The only way an employer can be confident in their classification decision is if they classify someone as an employee — the DOL will never question that decision.
What are we doing?
The Michigan Chamber has submitted comments regarding the Proposed Rule to DOL explaining the Chamber’s concerns and opposition. The letter points out how the Proposed Rule ignores the realities of how businesses and IC work together in the modern workforce, requests that the Proposed Rule be withdrawn and encourages DOL to double down on pursing enforcement actions against businesses abusing IC relationships under the authority given to them in 2021 Rules. The last point is especially relevant given that DOL has repeatedly boasted about the cases it has brought, and back pay remedies it has secured, since the 2021 Rule took effect.
Make your voice heard
We would encourage businesses relying on IC today consider commenting on the Proposed Rules. Comments are due to the DOL by Tuesday, Dec. 13, 2022 at 5 p.m. EST. For your convenience, we have compiled sample language, but encourage you to add anecdotes about how the Proposed Rule could impact your business or business model.
Want more details?
Companies wanting to learn more about the MI Chamber’s position and rationale can contact Wendy Block at wblock@michamber.com.