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ADVOCACY & POLICY UPDATE - October 17th, 2022

DOL Issues Proposed Rule on Independent Contractors

Washington Update

DOL Independent Contractor Rule

On Thursday, October 13, the U.S. Department of Labor (DOL) published a Notice of Proposed Rulemaking that overhauls its guidelines for distinguishing employees from independent contractors and is likely to make it tougher for businesses to classify workers as contractors. The proposed rule includes an “economic realities” test, which allows DOL to take into account a wide array of factors when determining employee status, such as employer control of their tasks and how much workers invest in their own equipment. It also directs the Department to analyze the “totality-of-the-circumstances” for a given worker, rather than look for discreet criteria in making determinations regarding employment status. It does not prioritize any factors in that assessment — shifting away from the Trump-era guidelines, which emphasized an individuals’ degree of control over their work and “opportunity for profit or loss” above others. Employer groups and Republicans argue the rule stifles business innovation.

There could be legal challenges to the proposed rule since Jessica Looman was “acting administrator” of DOL’s Wage and Hour Division at the start of the independent contractor rule process but dropped that title when President Joe Biden nominated her to lead the agency on a permanent basis (after the Senate failed to confirm his first choice, David Weil). The Federal Vacancies Reform Act prohibits individuals from continuing to serve as a temporary leader while their nomination is pending, but the Department came up with a workaround that’s lasted for several months while Looman awaits a Senate vote on her nomination. DOL has made her principal deputy administrator and delegates all allowable authority to that position, a move that complies with the law while not really meeting the spirit of it.

Several lawyers and DOL experts have said they do not believe it will create a legal problem mainly because authority ultimately lies with Secretary Marty Walsh. However, that doesn’t mean DOL can entirely rule out the possibility, especially since the Biden administration’s first attempt to pull back the Trump-era independent contractor rule was upended by a judge in Texas back in March.

Click here to read the DOL press release.

Click here to access the NOPR.

Industry-Recognized Apprenticeship Programs

On Thursday, October 6, Ranking Member of the Senate Health, Education, Labor, and Pensions (HELP) Committee Richard Burr sent U.S. Secretary of Labor Marty Walsh a letter criticizing the Department’s recent decision to rescind authorization for Industry-Recognized Apprenticeship Programs (IRAPs). In his letter, Senator Burr claimed “by eliminating IRAPs, DOL is creating an unnecessary obstacle for workers to have access to these additional high-quality training opportunities.” The Biden Administration feels IRAPs lack sufficient federal oversight compared to Registered Apprenticeships, which are regulated directly by the government.

Click here to access the letter.

Initial Jobless Rate

In the week ending October 8, the advance figure for seasonally adjusted initial claims was 228,000, an increase of 9,000 from the previous week's unrevised level of 219,000. The 4-week moving average was 211,500, an increase of 5,000 from the previous week's unrevised average of 206,500. The advance seasonally adjusted insured unemployment rate was 1.0 percent for the week ending October 1, unchanged from the previous week's unrevised rate.

Click here to access the report.

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