By Christopher T. Vrountas, Esq. and Allison C. Ayer, Esquire, Vrountas, Ayer & Chandler, P.C.
Businesses are probably reaching for their seatbelts as they continue to adjust to the whiplash associated with a new Presidential administration. These changes to the law have become more common given that increasingly legal guidance is driven by executive action rather than legislation. Most recently, we have seen the whiplash arise in the context of worker classifications.
On May 6, 2021, the United States Department of Labor (“DOL”) officially withdrew the Trump-era independent contractor rule. That rule established the Fair Labor Standard Act (“FLSA”) standard for determining when a worker is an employee or an independent contractor. This distinction is critical for businesses to determine their obligations to pay their individual workers. In essence, a worker who qualifies as an employee has to be paid in accordance with the minimum and overtime wage requirements of the FLSA. These FLSA wage rules do NOT apply to independent contractors. This means that employees have to be paid at least federal minimum wage for every hour they work, and they have to be paid compensated for overtime, at a rate at least 1.5 times the regular rate, for every hour worked over 40, while independent contractors do not.
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