US: Independent Contractor Rule Withdrawn

The US Department of Labor (DOL) has withdrawn the Independent Contractor Rule due to inconsistencies with policies regarding independent contractors outlined in the Fair Labor Standards Act (FLSA). The rule gave employers more power in classifying workers and made it more difficult for workers to dispute an independent contractor classification.

The DOL determined that the rule’s limited, two-factor test undermined the long-standing economic realities test and the totality of circumstances approach in place to protect worker rights. Employers must refer to the classification standards that predate the Independent Contractor Rule as of May 6, 2021. While President Biden supports using a similar concept to California’s strict ABC test used to define independent contractors, the DOL does not plan to implement a new rule anytime soon.

Takeaway: Worker classification rules will continue to change at both a national and state level. A clear view of the workforce and an objective understanding of every worker’s classification status are essential for companies to navigate that change. AGS can provide the technology and advisory capability to help organizations control and reduce the risks associated with worker classification.

US: Independent Contractor Rule Withdrawn

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