When an employee is misclassified as an independent contractor instead of an employee, they are denied crucial benefits and standard labor protections under the Fair Labor Standards Act (FLSA). The FLSA, enforced by the U.S. Department of Labor (DOL) Wage and Hour Division (WHD), establishes standards for recordkeeping, overtime pay, minimum wage, and youth employment in the private sector and for federal, state, and local governments.
On Oct. 13, 2022, the DOL published a Notice of Proposed Rulemaking to rescind its 2021 independent contractor classification rule under the FLSA and replace it with new guidance for how employers should interpret employee or independent contractor status. The agency recently indicated that it will likely publish a final independent contractor rule in October 2023. The proposed revision is intended to reduce the likelihood that employees will be misclassified as independent contractors and improve clarity for employers. If the proposed rule comes into effect, it will likely impact most employers. Employers are not required to change how they classify employees until the DOL’s proposed rule is finalized.
We recently released a document with information and several real-world case studies. Click the following link to view: Employment Case Studies: Today’s Misclassifications of Employees as Independent Contractors