independent contractor

By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

The United Brotherhood of Carpenters and Joiners of America this month announced on October 13 its support of the U.S. Dept. of Labor Wage and Hour Division’s proposed rule on determining employee and independent contractor status under the Fair Labor Standards Act.

The proposed rule rescinds and replaces the 2021 rule that the DOL rushed to implement in the closing days of the Trump Administration. Once implemented, this rule would affect millions of workers, including construction workers, healthcare workers and gig workers.

“Misclassifying workers as independent contractors has been a coordinated effort for years by companies who cheat their workers on wages and overtime, and who cheat payroll taxes,” said Douglas J. McCarron, general president of the United Brotherhood of Carpenters. “The previous administration’s independent contractor rule did nothing to solve that problem. In fact, it aggravated the issue and undermined law-abiding employers. We commend the Dept. of Labor for supporting good jobs and high-road employers.”

The classification of a worker as either an employee or an independent contractor is significant, says McCarron, because the Fair Labor Standard Act’s minimum wage, overtime and recordkeeping obligations apply only to employees, not to independent contractors. The consequences of misclassifying employees as independent contractors can include liability for failure to pay minimum wage and overtime, and possible criminal penalties in addition to other penalties under state wage laws.

Shortly after the Biden Administration commenced in January 2021, the Dept. of Labor first delayed implementing the Trump Administration rule and then withdrew it altogether in May 2021.

In March 2022, however, a Texas federal court held that both the rule implementation delay and the rule withdrawal were unlawful. As a result, the Trump rule went into effect.

The latest notice of proposed rulemaking abandons the Trump Administration’s list of factors in assessing independent contractor status and returns to a “totality of the circumstances” approach where the factfinder is free to consider any relevant facts in assessing whether individuals are economically dependent on their employer for work.

The Dept. of Labor is accepting comments on the proposed rule through November 28.

For more information and/or to comment on the rule, see https://www.federalregister.gov/documents/2022/10/13/2022-21454/employee-or-independent-contractor-classification-under-the-fair-labor-standards-act.