Home Health & Hospice Week

Trump-era rule is on its way out, proposal shows.

Home care workers are a prominent part of the group the Department of Labor hopes to help with a new proposed rule on independent contractor classification.

The regulation published in the Oct. 13 Federal Register aims to “help employers and workers determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act,” DOL explains in a release. “The proposed rule would provide guidance on classifying workers and seeks to combat employee misclassification. Misclassification is a serious issue that denies workers’ rights and protections under federal labor standards, promotes wage theft, allows certain employers to gain an unfair advantage over law-abiding businesses, and hurts the economy at-large,” Labor says.

“Misclassification disproportionately affects Black, indigenous, and people of color (BIPOC) because of the disparity in occupations affected by misclassification,” the DOL says in the proposed rule. “High incidence of misclassification of employees as independent contractors has been documented in agriculture, construction, trucking, housecleaning, in-home care, stagecraft, and ‘sharing economy’ companies,” it adds.

“We have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers,” Secretary of Labor Marty Walsh says in the release. “Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages. The Department of Labor remains committed to addressing the issue of misclassification,” Walsh stresses.

The new proposed rule, among other provisions, would rescind the 2021 Independent Contractor Rule, the release points out. That rule “stressed that two ‘core’ factors — a worker’s control over their work, and their opportunity for profit or loss — were paramount in making an independent contractor determination,” note attorneys James Paretti Jr., Michael Lotito, and Maury Baskin with law firm Littler in online analysis.

In a nutshell, “the Proposed Rule would scrap a Trump- era independent contractor rule and apply a totality-of-the-circumstances economic realities test,” summarize attorneys Russell Bruch, Christopher Parlo, and Shane O’Halloran with law firm Morgan Lewis in online analysis.

The DOL is taking comments on the rule until Nov. 28. But “while the scope of any final rule remains to be seen, we confidently predict it will dramatically limit the circumstances under which a worker may be properly classified as an independent contractor and is almost surely to be subject again to legal challenge,” Paretti Jr., Lotito, and Baskin say.

“The issue of whether a worker qualifies as an independent contractor will likely remain the subject of frequent litigation under the FLSA and applicable state wage and hour laws,” Bruch, Parlo, and O’Halloran expect. “Thus, employers should continue to review how their workers are classified,” they advise.

The 58-page rule is at https://www.govinfo.gov/content/pkg/FR-2022-10-13/pdf/2022-21454.pdf.