On May 5, 2021, the U.S. Department of Labor (DOL) announced it will officially withdraw the Independent Contractor final rule prior to the established effective date of May 7th. The rule would have required employers to use a certain financial test to determine whether a worker can be classified as an independent contractor or an employee. The withdrawal will be effective on the day the DOL’s official withdrawal is published in the Federal Register which is expected on May 6, 2021.
The rule was withdrawn due to it being deemed inconsistent with the Fair Labors Standard Act (FLSA). It was felt that implementation of the rule would lead to confusion that would likely lead to disruption and confusion for employers and employees.
Employers should review their employee classification procedures to ensure they comply with existing DOL guidance and all regulations related to the independent contractor rule can be disregarded.
Contact your Cowden representative for more information on this or other compliance issues.