DSA

The Department of Labor affirmed its final ruling on the classification of independent contractors under the Fair Labor Standards Act (FLSA). This final rule explicates that the core factors to be evaluated are “the nature and control over an individual’s work and the opportunity for profit or loss.” With these two elements met, the remaining factors will serve only as guidelines, and the actual exchange of money and compensation will be more controlling than a contract.

The DSA filed comments on the proposed rule “requesting that the final rule should clearly define direct sellers as independent contractors” since the final rule did not definitively include it. Within the final ruling were six examples to clarify when an individual meets the requirements to be classified as an independent contractor, none of which were within the direct selling, sales or retail categories.

The final rule is expected to take effect on March 8, but this may not take place, as the Biden Administration has implied that they intend to “freeze” the rule once in office on January 20. Business groups and independent contractor groups, of which the DSA are members, have entertained conversations about challenging this with legal action.

The trade association made clear in its DSA Washington Update, distributed to members this week, that it will continue to support legislation that specifically defines direct sellers as independent contractors: “We have already secured a commitment from Rep. Tim Walberg (R-MI) to re-introduce a version of H.R. 3522 in the 117th Congress. Independent contractor issues are likely to be on the agenda for this Congress. We will continue working with the Government Relations Committee and Independent Contractor Working Group to engage on these issues and communicate direct sellers’ unique places in this conversation.”