INSIDE COMPLIANCE

The U.S. Department of Labor (“DOL”) has recently proposed a rule change that would revise its interpretation of “independent contractor” under the Fair Labor Standard Act (“FLSA”). According to DOL, which has the power to investigate worker complaints about misclassifications, this change is needed to promote certainty for stakeholders, reduce litigation, and encourage innovation in the economy. However, this proposed rule could also diminish employee rights because independent contractors have fewer protections under FLSA. This rule widens the scope of who can be considered an independent contractor. Thus, many workers classified as employees could be reclassified as independent contractors and lose protections under FLSA.