Ted Hollis Discusses DOL’s Proposed Independent Contractor Rule with International Employment Lawyer
Ted Hollis, an Indianapolis-based partner in Quarles & Brady’s Labor & Employment Practice Group, spoke with International Employment Lawyer on the Department of Labor (DOL) Wage and Hour Division’s proposed rule that would rescind the Biden administration’s 2024 final rule that determines independent contractor status and replace it with an analysis similar to the one adopted during President Trump’s first term.
Hollis noted that the DOL views the 2024 final rule as misaligned with U.S. Supreme Court precedent and the modern economy. While the proposed rule may come as a relief to businesses, Hollis warns that employers still need to pay careful regard to state laws, many of which provide protections far greater than the federal standard. He also said that businesses that use or are considering independent contractors should evaluate how their arrangements fare under the proposed core factors, paying special attention to who controls schedules, work methods and the ability to work for others.
An excerpt below:
“The proposal clarifies that ‘economic dependence’ means dependence for work in the way a typical employee depends on an employer – not dependence for income in general,” explains Quarles & Brady’s Ted Hollis.
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“Finally, the DOL views the 2024 rule as misaligned with Supreme Court precedent and the modern economy, noting that certain traditional factors may have less predictive power in a knowledge-based economy with shorter job tenures.”
Hollis says the new rules could provide some much-needed peace of mind for employers struggling to grapple with previous approaches.
“The proposed rule, if finalised as drafted, would re-elevate control and opportunity for profit or loss as the central guideposts, provide more explicit protection for typical business-to-business contract terms from being treated as ‘control’ indicative of employment, and offer a single, uniform DOL standard for the US’s major federal employment laws.”
While this may come as a relief to many businesses, Hollis warns that employers still need to pay careful regard to state laws, many of which provide protections far greater than the federal standard.
“Businesses that use, or are considering using, independent contractors should evaluate how their arrangements fare under the proposed core factors, with special attention to who actually controls schedules, work methods, and the ability to work for others, and whether and how workers can increase profit or incur loss through initiative and investment related to the work.
“Employers should also consider submitting comments on the proposal, particularly regarding experiences applying the 2021 and 2024 rules, the clarity and utility of the ‘core factor’ structure, the treatment of safety and compliance requirements, and any industry-specific examples that would assist in applying the proposed test.”