The US Department of Labor issued a final rule on Wednesday clarifying the standard for determining independent entrepreneurial status under the Federal Fair Labor Standards Act, but there are several major states with more stringent qualifications, and the rule may eventually be chosen by the new administration, experts say. .
The final rule issued by the department, which enters into force on March 8, confirms an "economic reality test" to determine whether an individual should be considered as an independent contractor or as an employee of FLSA, DOL. said in his statement.
It stated that the two "core factors" for determining this are the nature and degree of control over work and the worker's opportunity for profit or loss based on initiative and / or investment.
statement said that three other factors that can serve as additional guidance in the analysis, especially when the two core factors do not point to the same classification, is the amount of skis required for the work. the degree of durability of the relationship and whether the work is part of an integrated production unit.
"The specific practices of the worker and the potential employer are more relevant than may be contractually or theoretically possible," the DOL said in a statement.
Experts, who say that the final rule is slightly different from a proposal issued in September, point out that New York, California, Connecticut, New Jersey and Massachusetts all have stricter rules that determine who can be considered an independent entrepreneur, which would take precedence in these states.
In these other states, it is very difficult to be considered an independent entrepreneur, and this can be an issue for employers who also have workers in other states, says Jonathan A. Segal, a partner and director of Duane Morris LLP in Philadelphia .
"If you work in a jurisdiction or jurisdictions where the local rules are more generous to employees …. then you need to worry about" on this issue, because if you misclassify workers under these state laws "you have problems" , says Eric B. Meyer, a partner with FisherBroyle's LLP in Philadelphia.
However, he added that the rule will apply to the majority of states, including Texas.
In addition, under the Biden Administration, "the rule can be changed rather than later, "said Segal. Many observers have said they expect the Biden Administration to be active in making it easier for independent entrepreneurs, including gig-economy employees, to be considered employees.
This is probably not the case. top priority for Biden Administration, but observers say. "I guess this is not a bell that can not be rung, but I wonder" about its priority among the hierarchy of issues that Biden Administration will handle a, said Meyer.
Mr. Segal also said, "You can not necessarily conclude that the FLSA rule will apply to all other federal laws," including Title VII of the Civil Rights Act of 1
In addition, federal courts are not required to comply with the rule and may not suspend it, experts say.
Mr. Meyer added, however, that for those states where the rule applies, it adds a level of guidance and specificity and a roadmap for employers to follow. Catalog