Tag: Contractor

  • WHD Issues Enforcement Guidance on Independent Contractor Classification – CUPA-HR

    WHD Issues Enforcement Guidance on Independent Contractor Classification – CUPA-HR

    by CUPA-HR | May 5, 2025

    On May 1, the Department of Labor’s Wage and Hour Division (WHD) issued a field assistance bulletin providing guidance on determining employee or independent contractor status under the Fair Labor Standards Act (FLSA) while DOL reviews the 2024 final rule, Employee or Independent Contractor Classification Under the Fair Labor Standards Act. The rule currently faces legal action in multiple federal court cases in which the Trump DOL has taken the position that it is reconsidering the 2024 rule, including whether to rescind the regulation.

    Simply put, the bulletin states that WHD “will no longer apply the 2024 Rule’s analysis when determining employee versus independent contractor status in FLSA investigations.” Instead, WHD will enforce the FLSA’s worker classification rules according to Fact Sheet #13, which was issued in 2008, and Opinion Letter FLSA2019-6, which was issued during President Trump’s first term.

    The opinion letter from Trump’s first term articulates WHD’s position on gig economy worker classification, ultimately finding such workers to be independent contractors because they work for the consumer and do not fit “any traditional employment paradigm” under the FLSA. The Biden administration previously withdrew the opinion letter, but it has now been reinstated as Opinion Letter FLSA2025-2.

    Fact Sheet #13 provides a broader perspective regarding the meaning of “employment relationship.” It specifically asserts that an employee under the FLSA is “one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business which he or she serves,” and that an employer-employee relationship under the law is tested by “economic reality.” It also lists seven factors that are considered significant by the Supreme Court in determining employee classification under the FLSA:

    • The extent to which the services rendered are an integral part of the principal’s business;
    • The permanency of the relationship;
    • The amount of the alleged contractor’s investment in facilities and equipment;
    • The nature and degree of control by the principal;
    • The alleged contractor’s opportunities for profit and loss;
    • The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor; and
    • The degree of independent business organization and operation.

    Looking Ahead

    The field assistance bulletin changes the enforcement priorities of WHD with respect to worker classification, though the Biden administration’s independent contractor rule remains in effect for the time being. Legal challenges against the Biden rule are ongoing, and the Trump administration has started reviewing the regulation, though there is no official process yet to rescind it.

    CUPA-HR continues to monitor for updates related to the independent contractor classification regulations and will keep members informed of future updates.



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  • Department of Labor Issues Independent Contractor Final Rule – CUPA-HR

    Department of Labor Issues Independent Contractor Final Rule – CUPA-HR

    by CUPA-HR | January 11, 2024

    On January 10, the Department of Labor’s (DOL) Wage and Hour Division (WHD) published the highly anticipated rule modifying the test for determining whether a worker is an employee or independent contractor under the Fair Labor Standards Act (FLSA). The final rule rescinds the current “core factors” method for determining independent contractor status under the FLSA and implements a return to a “totality-of-the-circumstance analysis.”

    Under the final rule, the method of determining worker classification will use a totality-of-the-circumstance analysis of multiple factors in an economic reality test, including the following six factors.

    • The extent to which the work is integral to the employer’s business.
    • The worker’s opportunity for profit or loss depending on managerial skill.
    • The investments made by the worker and the employer.
    • The worker’s use of skill and initiative.
    • The permanency of the work relationship.
    • The degree of control exercised or retained by the employer.

    Under the final rule, any particular factor could be determinative in establishing a worker’s classification, and additional undefined factors may be relevant in the analysis as well. The final rule is therefore a significant departure from the previous rule finalized in 2021, under which two core factors primarily guided worker classification determinations.

    The WHD has established March 11, 2024, as the effective date of this new rule, meaning institutions will need to be in compliance by then. The rule is likely to be challenged in federal court by business groups, and legislators in the U.S. House of Representatives and Senate have indicated they will introduce resolutions of disapproval under the Congressional Review Act in an attempt to nullify the final regulation. CUPA-HR will keep members apprised of any new updates as it relates to the status of this final rule.



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  • DOL Issues Final Rule to Increase Federal Contractor Minimum Wage – CUPA-HR

    DOL Issues Final Rule to Increase Federal Contractor Minimum Wage – CUPA-HR

    by CUPA-HR | December 13, 2021

    On November 24, the Department of Labor (DOL)’s Wage and Hour Division (WHD) issued a final rule implementing President Biden’s Executive Order 14026 (EO), “Increasing the Minimum Wage for Federal Contractors.” The rule increases the minimum wage for federal government contractors for workers who work on or in connection with a covered federal contract to $15 per hour beginning January 30, 2022, and requires the secretary of labor to annually review and determine the minimum wage amount beginning January 1, 2023.

    As stated above, the final rule establishes standards and procedures for implementing and enforcing the minimum wage protections of Executive Order 14026. Starting January 30, 2022, all agencies will need to include a $15 minimum wage in new contracts, new solicitations, extensions or renewals of an existing contract, and exercises of an option on an existing contract. Under the EO and final rule, contracts with solicitations issued before January 30, 2022, and entered into, on or between January 30 and March 30, 2022 will be exempt from the wage. If such a contract is subsequently extended or renewed or an option is exercised under the contract, the $15 minimum wage will apply.

    Covered Contracts

    According to the EO and as finalized in the rule, the $15 minimum wage requirement only applies to the following contracts:

    • Procurement contracts for services or construction;
    • Contracts for services covered by the Service Contract Act (SCA);
    • Contracts for concessions; and
    • Contracts “entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.”

    The new minimum wage clause will NOT need to be included in:

    • Federal grants;
    • Contracts or agreements with Indian Tribes under the Indian Self-Determination and Education Assistance Act;
    • Procurement contracts for construction that are excluded from coverage of the Davis-Bacon Act (DBA);
    • Contracts for services that are exempt from coverage under the SCA; and
    • Contracts for the manufacturing of materials, supplies, articles or equipment to the Federal Government.

    Covered Workers

    The WHD defines a covered worker in the final rule as “any person engaged in performing work on or in connection with a contract covered by the EO, and whose wages under such contract are governed by the [Fair Labor Standards Act (FLSA)], the SCA or the DBA, regardless of the contractual relationship alleged to exist between the individual and the employer.” A worker who performs “on” a covered contract is defined as “any worker who directly performs the specific services called for by the contract’s terms,” and a worker who performs “in connection with” a covered contract is defined as “any worker who performs work activities that, although are not the specific services called for by the contract’s terms, are necessary to the performance of those specific services.”

    One exemption to the rule’s minimum wage requirement is provided for FLSA-covered workers performing work “in connection with” covered contracts for less than 20 percent of their working hours in a given workweek.

    The final rule also clarifies that certain employees who are exempt from the minimum wage protections under the FLSA are also not entitled to the $15 minimum wage protection of the EO and final rule. In an FAQ page on the EO and final rule, the WHD provides “learners, apprentices, messengers and full-time students employed under certificates pursuant to FLSA sections 14(a) and (b)” as examples of individuals who are excluded from the EO’s minimum wage requirements.

    Additional Considerations

    As mentioned above, the secretary of labor will be granted authority to annually review and increase the minimum wage beginning January 1, 2023. The minimum wage will be increased by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers to address inflation.

    Additionally, the EO and final rule change compensation for tipped employees working on or in connection with a covered contract. Beginning January 30, 2022, such tipped employees must be paid a wage of at least $10.50 per hour. By January 1, 2024, the tip credit must be eliminated for such employees, and they must earn the same minimum hourly rate that other covered employees are entitled to.

    CUPA-HR will keep members apprised of any updates and resources to aid institutions as the new minimum wage final rule becomes effective.



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