DOL gets backlash on its new ‘gig worker’ rule, extends comment period

After several business groups complained about the original timeline of the DOL’s proposed independent contractor rule, the agency is now allowing interested parties 15 additional days to comment on the rule. The U.S. Department of Labor extended the deadline from November 28 to December 13.

The proposed rule, released on October 11 (and published in the Federal Register October 13), would rescind a 2021 rule in which two core factors – control over the work and opportunity for profit or loss – carried greater weight in determining the status of independent contractors. Under the proposed rule, employers would use a totality-of-the-circumstances analysis in which all factors do not have a predetermined weight. Those factors may include:

• The amount of skill required for the work,
• The degree of permanence of the working relationship,
• The worker’s investment in equipment or materials required for the task, and
• The extent to which the service rendered is an integral part of the employer’s business.

The initial 45-day public comment period could have raised questions under the Administrative Procedure Act, a law that governs the agency rulemaking process and requires that agencies give the public a “meaningful” opportunity to provide feedback on policy changes, critics of the rulemaking said.

“We are thoroughly reviewing the proposed rule as it is imperative to preserve independent financial advisors’ ability to choose to be independent contractors and provide the same level of certainty and clarity the existing rule provides independent advisors,” wrote the  Financial Service Institute in a letter to the DOL. “We look forward to constructively engaging with DOL staff to ensure advisors’ independent contractor status is protected.”

“Given the enormous number of companies and sole proprietors who will be affected by this regulation and the serious concerns we have with the proposal, more time is required to engage with businesses and solicit input on how this proposed rule would impact their operations,” the U.S. Chamber of Commerce wrote in its request for an extension.

Many employer representatives who already have filed comments have asked the department to reconsider its proposal, arguing that such an expansion of coverage would require a full overhaul for some companies and hamper already strained talent acquisition efforts at others.

After the comment period ends, the agency will review every comment and prepare to finalize the rule, a process that could take several months. When the rule is finalized, which is expected to happen in the first quarter of next year, opponents of the regulation will be able to challenge it in court; and some groups have suggested they plan to do so.

To read the complete rule or submit a comment, visit Federal Register: Employee or Independent Contractor Classification Under the Fair Labor Standards Act; Extension of Comment Period.