DOL Issues Final Independent Contractor Rule

The Department of Labor promulgated a final rule Jan. 9 to define the test for independent contractor status under the Fair Labor Standards Act. The rule rescinds the 2021 Trump administration’s more employer-friendly rule.

The proposed rule provided six factors, including skill, the degree to which the work done is integral the employer’s business, and the degree of permanence of the role.. However, the DOL notes that “additional factors” may also be considered where applicable to underscore that the original factors should not be simply applied technically, and that “economic reality” is what matters, not labels or formalities. NAMIC filed comments in 2022 opposing the new rule as an overly expansive interpretation of certain factors based on a selective reading of the case law, and it suggests an arbitrary and capricious action.

The insurance industry has successfully used independent contractor agents and brokers for many decades. There is no suggestion that the highly regulated insurance industry is somehow prone to or has a history of wage-and-hour abuses. The erroneous and overinclusive rule raises the risk of harming millions of stakeholders, including independent contractor insurance agents and consumers.

The final rule takes effect on March 11.