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Capitol Correspondence - 05.14.21

Independent Contractor Rule – Summary

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Last week, the Federal Department of Labor, Wage and Hour Division withdrew the Independent Contractor Final Rule that was pending adoption. The Department is withdrawing the rule for several reasons, including:

  • The independent contractor rule was in tension with the FLSA’s text and purpose, as well as relevant judicial precedent.
  • The rule’s prioritization of two “core factors” for determining employee status under the FLSA would have undermined the longstanding balancing approach of the economic realities test and court decisions requiring a review of the totality of the circumstances related to the employment relationship.
  • The rule would have narrowed the facts and considerations comprising the analysis whether a worker is an employee or an independent contractor, resulting in workers losing FLSA protections.

What does this mean for providers?

  • When the Interim Final Rule was released in January, the WHD cited ANCOR’s October 2020 comments referencing prior guidance on the impact to Shared Living.  The WHD specifically acknowledged that. ”…none of the industry-specific guidance in Administrator’s Interpretation No. 2014-1 is meaningfully affected by this final rule…”
  • Essentially, the Rule set to take effect on May 6th, did NOT impact Shared Living and similar programs. And now that the rule has been withdrawn, Shared Living programs’ classification of independent contractors still stands.