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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As If Calling Its Wrestlers ‘Independent Contractors’ Wasn’t Enough, WWE Is Now Going to Hijack Their Twitch Accounts

Encouraging wrestlers to develop their own brand and then coming back to say, “Oh hey, sorry, you need to give us your Twitch account now,” just seems wrong. However, that’s exactly what WWE is doing to its wrestlers, who learned this week that the company would be taking over their Twitch accounts in four weeks, according to WrestlingINC.

a man standing in front of a crowd: Seth Rollins celebrates his victory over John Cena at the WWE SummerSlam 2015 at Barclays Center of Brooklyn on August 23, 2015 in New York City.

© Photo: JP Yim (Getty Images)
Seth Rollins celebrates his victory over John Cena at the WWE SummerSlam 2015 at Barclays Center of Brooklyn on August 23, 2015 in New York City.

The Twitch takeover is related to an edict issued by WWE CEO Vince McMahon at the beginning of September. Per WrestlingINC, the edict stated that talent could no longer “engage with outside third parties” and that wrestlers had 30 days to terminate third-party activities. In a letter to wrestlers at that time, McMahon said that some individuals that were engaged with third parties were “using your name and likeness in ways that are detrimental” to the company.


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Wrestlers that did not do as instructed and engaged in “continued violations” would face fines, suspension and termination, McMahon said.

Although it was apparently not immediately clear that the edict would affect wrestlers’ Twitch and YouTube accounts, WWE later said that its talent could maintain accounts on these platforms under their real names, WrestlingINC reported. However, they would still need to inform WWE of these accounts.

This week, wrestlers learned what would happen to their Twitch accounts. In a few short weeks, these accounts will become the property of WWE, which will own them and give talent a percentage of the revenue. This percentage counts against their downside guarantees, or the money they’re guaranteed to make.

In interviews with PWInsider, several wrestlers, speaking anonymously, said that they would now have to

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‘Employee’ or ‘independent contractor’? DOL proposed definitions could save companies millions

A new U.S. Department of Labor proposal aimed at clarifying whether workers should be classified as “employees” or “independent contractors” could have a major impact on how companies do business and pay their workers – although there are a number of “ifs” associated with the proposition.

“The Department’s proposal aims to bring clarity and consistency to the determination of who’s an independent contractor under the Fair Labor Standards Act (FLSA),” said Secretary of Labor Eugene Scalia. “Once finalized, it will make it easier to identify employees covered by the Act, while respecting the decision other workers make to pursue the freedom and entrepreneurialism associated with being an independent contractor.”

“The rule we proposed today continues our work to simplify the compliance landscape for businesses and to improve conditions for workers,” said Wage and Hour Division Administrator Cheryl Stanton. “The Department believes that streamlining and clarifying the test to identify independent contractors will reduce worker misclassification, reduce litigation, increase efficiency, and increase job satisfaction and flexibility.”

Announced on Sept. 22, the DOL’s proposed rule would:

  • Adopt an “economic reality” test to determine a worker’s status as an FLSA employee or an independent contractor. The test considers whether a worker is in business for himself or herself (independent contractor) or is economically dependent on a putative employer for work (employee)
  • Identify and explain two “core factors” — specifically the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on initiative and/or investment. Those factors help determine if a worker is economically dependent on someone else’s business or is in business for himself or herself;
  • Identify three other factors that may serve as additional guideposts in the analysis: the amount of skill required for the work; the degree of permanence of the working
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How DOL Proposal Changes Independent Contractor Analysis

Law360 (September 28, 2020, 1:48 PM EDT) — On Sept. 25, the U.S. Department of Labor issued a notice of proposed rulemaking[1] and request for comments in the Federal Register that seeks to simplify and clarify how to determine whether a worker is an independent contractor or employee under the Fair Labor Standards Act.

The DOL has fast-tracked this rule and appears committed to finalizing the proposed regulations before the end of the year.

President Franklin Roosevelt signed the FLSA following the Great Depression and before the U.S. entered World War II when the options for work were largely limited to earning a wage by working for someone else….

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U.S. Labor Department could make it easier to treat workers as independent contractors

FILE PHOTO: The United States Department of Labor is seen in Washington, D.C., U.S., August 30, 2020. REUTERS/Andrew Kelly

(Reuters) – The U.S. Department of Labor on Tuesday said it would soon propose a rule that could make it easier to classify workers as independent contractors rather than employees, a major issue for the “gig economy” and other industries that use contractors to contain costs.

During a phone call with reporters, senior department officials said the rule, if adopted, would provide courts with a “cleaner and easier-to-use process” than the complex multi-factor test currently applied in lawsuits alleging workers have been misclassified.

Independent contractors are not entitled to many of the legal protections afforded to employees, such as minimum wage and overtime pay. Employees can cost companies up to 40% more than contractors, according to several studies.

The labor department will publish a formal proposal by next week, the officials said, and adopt a final rule by the end of the year.

Under the proposal, a worker would be considered a company’s employee if he or she is economically dependent on the company for work. But a worker who operates an independent business and has opportunities for profit or loss would be deemed an independent contractor.

The proposal comes as Uber Technologies Inc and other gig economy firms are challenging a California law adopted last year that makes it more difficult to treat workers as independent contractors.

Uber and courier service Postmates Inc have filed a lawsuit claiming the law is unconstitutional. The companies also have launched a campaign to urge California voters to approve a ballot referendum in November that would exempt app-based services from the scope of the law.

The upcoming proposal by the labor department would not override stricter state laws. But it would likely make it

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