Rule

DOL’s Proposed Rule on Independent Contractors

In this episode of The Proskauer Brief, partners Harris Mufson and Allan Bloom discuss the U.S. Department of Labor’s proposed new rule on independent contractor classification.  In recent years, the misclassification of workers as independent contractors has been the subject of a number of private lawsuits and investigations by government agencies.  This is true for traditional industries and also companies within the gig economy, which rely heavily on independent contractors.  So be sure to tune in as we address how this proposed rule may impact employers’ classification of workers.

Harris Mufson:  Welcome to The Proskauer Brief: Hot Topics in Labor and Employment Law.  I’m Harris Mufson and on today’s episode I’m joined by Allan Bloom and we’re going to discuss the Department of Labor’s proposed new rule on independent contractor’s classification.  So Allan, Employment Law really divides workers into two categories: one employees and the others independent contractors, and the Department of Labor has proposed a new rule regarding the classification of workers as independent contractors.  Can you describe that rule?

Allan Bloom:  Harris that’s right. Employees are generally covered by the federal wage and hour laws so that means minimum wage that means overtime pay but independent contractors are not covered so whether a worker is an employee or an independent contractor is a major issue under the wage and hour laws in addition to a number of other laws. Particularly in the last few years the misclassification of workers as independent contractors has been the subject of a number of private lawsuits a number of investigations by government labor agencies and tax agencies and this is not only in traditional industries but also in businesses within the gig economy or the on-demand economy that rely heavily on independently contracted workers.  So the legal rights of these types of

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DOL Proposed Rule Clarifying Test for Worker Classification

On September 22, 2020, the United States Department of Labor (DOL) released a long-awaited proposed rule (the “Proposed Rule”) providing guidance for determining employee versus independent contractor status under the Fair Labor Standards Act (FLSA).  For decades, employers have struggled with properly classifying workers, oftentimes resulting in substantial liability for, among other things, unpaid overtime and unpaid payroll taxes.  If adopted, the Proposed Rule may make it easier for employers to classify workers as independent contractors.

Background and the Need for Rulemaking

While the employee versus independent contractor debate has garnered significant attention over the years as more workers desire the flexibility that comes with contractor status, the DOL has never promulgated a formal regulation addressing the matter.  Instead, since 1954, the DOL has issued and revised guidance based upon a multifactor “economic reality” test, which focuses on the economic independence of the worker.  This evolving guidance, mostly issued through opinion letters, has often been anything but clear.

The Proposed Rule critiqued the DOL’s prior guidance on the issue as follows:

First, the test’s overarching concept of “economic dependence” is under-developed and sometimes inconsistently applied, rendering it a source of confusion. Second, the test is indefinite and amorphous in that it makes all facts potentially relevant without providing any guidance on how to prioritize or balance different and sometimes competing considerations. Third, inefficiency and lack of structure in the test further stem from blurred boundaries between the factors. Fourth, these shortcomings have become more apparent over time as technology, economic conditions, and work relationships have evolved.

The Proposed Ruled is intended to bring clarity and consistency to the employee versus independent contractor determination, allowing employers to more readily identify workers covered by the FLSA and at the same time respecting the prerogative of workers to pursue

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Contractors Seek Clarity On DOD Cybersecurity Rule

Law360 (September 29, 2020, 10:28 PM EDT) — Defense contractors are grappling with a new rule requiring them to implement cybersecurity programs that leaves crucial questions unanswered, including the exact information companies will be required to safeguard and how the new obligations will be worked into contracts.

The interim rule, formally published by the U.S. Department of Defense on Tuesday, explains how contractors will be assessed for compliance with the Cybersecurity Maturity Model Certification framework, the DOD’s plan that will eventually attach minimum cybersecurity requirements to all of its contract solicitations.

Improving cybersecurity standards across the DOD’s supply chain is intended to help better protect “controlled unclassified information” and…

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DOD Rule Requires Contractors To Focus On Cybersecurity

Law360 (September 28, 2020, 10:25 PM EDT) — All defense contractors and subcontractors will be required to implement cybersecurity programs under a rule issued by the U.S. Department of Defense on Monday as part of a plan to attach minimum cybersecurity requirements to all Pentagon contracts.

The interim Defense Federal Acquisition Regulation Supplement rule broadly sets out the standards that contractors must meet to be certified under the Cybersecurity Maturity Model Certification framework, a pending overhaul to how the DOD handles cybersecurity across its procurements.

“CMMC is designed to provide increased assurance to the department that a [defense industrial base] contractor can adequately protect sensitive unclassified information such as…

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