New DOL Independent Contractor Rule an Ill-Fitting Solution, HR Policy Argues

The Association filed comments with the Wage and Hour Division of the Department of Labor regarding its proposed rule on independent contractor status under federal law. HR Policy advocated for an approach that would permit companies to provide benefits and protections to contractors without unnecessarily creating an employer-employee relationship, and argued the proposed rule was an ill-fitting solution that mischaracterizes the misclassification issue. 

HRPA advocated for a safe harbor under the FLSA that would empower companies to extend benefits and protections already offered to their own employees – such as health care, retirement plans, career development, training, and others – to their contingent workforce, without unnecessarily creating an employer-employee relationship under federal law sought by neither party. Such an approach would provide a needed safety net to gig workers and benefit all independent contractors in general, without in any way inhibiting the Department’s ability to target intentional misclassification where it exists. 

Our comments further highlighted that the proposed rule is an overly broad, ill-fitting solution that mischaracterizes the misclassification issue and would inappropriately restrict independent contractor status to the detriment of workers, companies, and the American economy as a whole. “The Department’s proposed rule on independent contractor status, is, unfortunately, a sledgehammer in the place of a much-needed scalpel.”

Outlook: Although a final rule is unlikely to be issued anytime soon, employers can expect it to come sometime in 2023. The final rule will likely face litigation challenges from the business community.