Association News
What the New DOL Independent Contractor Ruling Means for the Supply Chain
On January 9 , the Department of Labor ( DOL ) issued the final version of the rule to determine whether a worker is an employee or independent contractor ( IC ) under the Fair Labor Standards Act ( FLSA ). In this version of the rule , the DOL ’ s definition of an IC has shifted to a more employee-slanted one . Past administrations have defined IC status using two primary factors - opportunity for profit and loss and control - and four secondary factors . In the DOL ’ s new interpretation , that decision will be based on all six factors , making it more likely that an IC will be deemed to be an employee .
“ This interpretation is slanted in favor of finding employee status and particularly unfair to the delivery and trucking industries ,” says Mark Cossack , head of Government Affairs at the Customized Logistics & Delivery Association . “ We took this issue head-on , mobilizing our 2,900 members , many of whom rely on independent contractors . We vigorously lobbied against the changes in both written and in-person avenues . There was also an outcry from other industries that use ICs . As a result , the January 9 release of the rule has been changed . These came about because of our association ’ s aggressive in-person and written efforts to actively engage with the Office of Management and Budget ( OMB ) and the DOL , respectively , to outline the position of our members . It represents a slight softening of the rule that was initially proposed . That original version would have severely restricted the use of ICs under federal minimum wage and overtime laws .”
Cossack pointed out that this rule change does not signal the end of this contentious issue . “ This is just another step towards a realistic and complete definition of an IC on the federal level ,” says Cossack . “ We will continue to advocate for litigation challenging the rule and federal legislation adequately defining an IC .”
The association is currently organizing a trip to Washington , DC , to meet with legislators to explain the need for a formal and realistic definition of an IC . “ The fight is not over . We need the help and financial support of every business that depends on ICs to meet customer demands . We can ’ t do this alone ,” says Cossack .
The rule is scheduled to be implemented on March 11 , 2024 . The changes included as a result of our lobbying efforts include :
• Nature and degree of control . The final rule loosens up the definition of control to allow the courier company to require essential compliance with laws and regulations from its drivers . The original version said that when an employer requires an independent contractor to comply with regulations or laws ( like those involving traffic safety ), this constitutes enough control to make the IC into an employee .
• Investments . The final rule loosens the amount an IC must invest to keep their status as independent contractors . It said that the Department of Labor would not compare their investments with the courier companies on a dollar-for-dollar basis . Instead , the Department will review investments to determine whether the worker demonstrates independence . The original version rule said that an independent contractor would have had to invest as much as the company they serve to maintain their status as an IC .
• CDL Drivers . The final rule recognizes that a driver with a commercial driver ’ s license ( CDL ) has a specialized skill set that weighs toward independent contractor status .
52 customized logistics & delivery Magazine SUMMER I winter 2021 2024