This development effectively means that employers are still subject to the FLSA contractor test used prior to the DOLs Trump-era final rule. Under that test, multiple factors need to be assessed when considering whether a worker qualifies as an independent contractor, including:
- The extent to which the services rendered by the worker are an integral part of the employer's business.
- The permanency of the relationship.
- The amount of the workers investment in facilities and equipment.
- The nature and degree of control by the employer.
- The workers opportunities for profit and loss.
- The amount of initiative, judgment, or foresight in open market competition with others required for the success of the worker.
- The degree of independent business organization and operation.
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
- The worker performs tasks that are outside the usual course of the hiring entity's business.
- The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.
Moving towards a nationwide ABC Test would be a significant shift for numerous employers and would likely require a review of existing independent contractor arrangements to ensure compliance. Alternatively, the DOL might leave in place the current pre-Trump administration rule or adopt some other approach.
We will continue to monitor any legislative or executive changes on the classification front and update accordingly.