Employers may recall that on January 6, 2021, just weeks before President Joe Biden took office, the DOL issued a new rule regarding the classification of workers as independent contractors or employees under the Fair Labor Standards Act (FLSA). The rule provided a five-factor revised “economic reality” test, with two “core factors”: (i) the nature and degree of the worker’s control over the work and (ii) the worker’s opportunity for profit or loss. The rule was aimed at providing more consistency and clarity for employers evaluating proper classification of workers.
The withdrawal of the rule was anticipated, as the Biden-administered DOL initially delayed the effective date and announced its intention to withdraw the rule in March 2021.
The Biden administration also withdrew an April 2019 DOL opinion letter that was the genesis of the Trump-era rule; this opinion letter approved independent contractor status for workers who used an app-based tech company’s app to connect with customers to provide services such as cleaning, transportation, and plumbing.
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