Monday, December 5, 2022
HomeSubject AreaPolitical AdvocacyDOL Proposes New Impartial Contractor Rule

DOL Proposes New Impartial Contractor Rule

On October 11, 2022, the U.S. Division of Labor launched a proposed rule decoding how a employee is assessed underneath the Truthful Labor Requirements Act (FLSA).The proposed rule doesn’t influence the classification of actual property professionals as impartial contractors underneath the Inner Income Code (26 U.S.C. §3508).

The DOL has proposed the rule to make sure coated employers are offering staff, together with “gig staff,” with minimal wage and time beyond regulation pay as required underneath the FLSA, to make sure consistency with current judicial precedent and the Division’s longstanding steering. The proposed rule adopts an “financial realities take a look at,” the place the usual for figuring out if a employee is an worker or an impartial contractor is predicated on whether or not the employee is economically depending on the employer for work or is in enterprise for themselves. To guage the financial dependence, the proposed rule conducts a “totality-of-the-circumstances” evaluation, contemplating a number of elements, slightly than remoted standards to find out employment standing. Whereas there are a variety of things thought of on this evaluation, they typically embody:

  • The chance for revenue or loss relying on managerial talent;
  • Investments by the employee and the employer;
  • Diploma of permanence of the work relationship;
  • Nature and diploma of management by the employer over the employee;
  • Extent to which the work carried out is an integral a part of the employer’s enterprise; and,
  • Ability and initiative.

Underneath the totality-of-circumstances evaluation, the financial actuality elements aren’t exhaustive, aren’t assigned a predetermined weight, and are every given full consideration. The proposed rule doesn’t undertake the “ABC take a look at” or the “frequent regulation take a look at” for classifying impartial contractors, which DOL believes is prohibited from adopting resulting from “authorized limitations.” The proposed rule underneath the FLSA additionally doesn’t influence actual property professionals’ specific safety within the Inner Income Code, 26 U.S.C. §3508, which offers the framework to categorise them as statutory non-employees for federal tax functions

NAR helps the safety of, and efforts to additional safe, the suitable of actual property gross sales folks to work as impartial contractors and for brokers to decide on to categorise actual property salespeople as impartial contractors. NAR will submit a touch upon the proposed rule through the 45 day public remark interval.

Learn extra on the proposed rule.

See extra info on NAR’s advocacy to guard impartial contractors.

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