Capitol Correspondence - 01.12.21

Two Updates from DOL: Contractor Rule, Opinion Letter on Ministerial Exemption

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To assist our members with their duties as employers to comply with the Fair Labor Standards Act, we share the following two updates from the Department of Labor (DOL):

DOL issues final Independent Contractor Rule:

The rule clarifies the standard for employee versus independent contractor status under the Fair Labor Standards Act (FLSA). ANCOR commented on this rule when it was still a proposal. In a nutshell, the final rule:

  • “Reaffirms an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (FLSA employee).
  • Identifies and explains two “core factors” that are most probative to the question of whether a worker is economically dependent on someone else’s business or is in business for him or herself:
    • The nature and degree of control over the work.
    • The worker’s opportunity for profit or loss based on initiative and/or investment.
  • Identifies three other factors that may serve as additional guideposts in the analysis, particularly when the two core factors do not point to the same classification. The factors are:
    • The amount of skill required for the work.
    • The degree of permanence of the working relationship between the worker and the potential employer.
    • Whether the work is part of an integrated unit of production.
  • The actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible.
  • Provides six fact-specific examples applying the factors.

The rule will take effect 60 days after publication in the Federal Register, on March 8, 2021.”

DOL issues opinion letter on applicability of ministerial exemption to religious daycare and preschool teachers:

We encourage our members who run church-affiliated or faith-based daycare and pre-school programs for children with disabilities to read this opinion letter. The letter addresses whether the ministerial exception allows a private religious daycare and preschool to pay its teachers on a salary basis that would not otherwise conform with the requirements of the FLSA.