Labor Department Reviews Independent Contractor, Other Rules

Worker classification, overtime, tip-credit rules, and joint-employer rules are at the forefront of the Labor Department’s regulatory agenda, a department official said March 16.

The agency has been busy in the early months of the Biden administration as it deals with those issues as well as the effect of the coronavirus pandemic, said Jessica Looman, principal deputy administrator of the department’s Wage and Hour Division.

The department issued formal notices last week that it would like to withdraw the independent contractor final rule, a signature Trump administration policy that would have made it easier for employers to classify workers as independent contractors, and the joint-employer final rule, which would limit situations that employers share liability over wage violations.

Looman said the agency found that some aspects of the independent contractor rule were “confusing and in direct conflict with previous guidance” and that the rule would narrow and minimize the tools that people would use to determine the independent contractor standard.

Employers dealing with the issue should look toward the agency’s Fact Sheet 13 for guidance, Looman said at the American Payroll Association’s online Capital Summit.

The agency also is moving to propose revisions to the tip final rule, which was finalized in December but had been delayed until April 30 for an extended comment period. The tip-pooling rule, which also was advanced in the waning days of the Trump administration, would allow employers to pay workers a lower minimum wage regardless of how much time they spend performing duties that generate gratuities.

Looman called on payroll professionals to weigh in on the various rules through comments, which can be made through April 12 at www.regulations.gov.

Employers should also be aware that the agency ended on Jan. 29 the Payroll Audit Independent Determination (PAID) program, Looman said. The program allowed employers to have safe harbor for wage and hour violations. The agency is incorporating lessons learned through PAID into existing programs, she said.

The Wage and Hour Division has also undertaken an “unprecedented level of outreach, education, technical assistance and enforcement of the Families First Coronavirus Response Act” as it grappled with fallout from the pandemic, Looman said.

As part of the impact of the FFCRA, the agency carried out 5,200 investigations, held more than 2,900 outreach events, answered more than 400,000 calls, and enacted a large public awareness campaign, which amassed 400 million views, she said.

“Our new normal has surfaced many new payroll challenges,” Looman said.

She reminded payroll professionals that FFCRA tax credits were extended through Sept. 30, 2021, under the American Rescue Plan Act of 2021.