Many thanks to our Franchise, Distribution & Global Brand Expansion colleagues Abhishek Dubé, Kevin Maher, and Will Woods for co-authoring this post.
Massachusetts’ independent contractor statute applies to the franchisor-franchisee relationship and is not in conflict with the franchisor’s disclosure obligations under the FTC Franchise Rule (the “FTC Rule”), according to
On May 5, 2021, the US Department of Labor (DOL) announced the withdrawal of the previous administration’s independent contractor rule, effective May 6, 2021. The DOL has not proposed any regulatory guidance to replace the rule, leaving employers with no clear guidance on worker classification under the FLSA.
The withdrawal is no surprise. The DOL
The Department of Labor (DOL) has proposed to put the final nail in the coffin on two Trump era rules under the Fair Labor Standards Act (FLSA) that were favorable to employers. On March 12, 2021, the DOL’s Wage and Hour Division published in the Federal Register both a proposed rule to rescind the Trump administration’s rule on joint employer status under the FLSA and a proposed rule to withdraw the Trump administration’s rule on independent contractor status under the FLSA. In both cases, the DOL is seeking public comments for 30 days (until April 11, 2021). Neither of these proposed rules comes as a surprise to those keeping tabs on the Biden administration’s agenda, but the DOL has not proposed any new guidance, leaving employers wondering what comes next.
Continue Reading The DOL Proposes to Nix the Trump Administration’s Joint Employer and Independent Contractor Rules
The DOL’s just-issued final rule on employee vs. independent contractor classifications under the FLSA seems likely to be reversed. On January 20, the White House issued a memorandum to the heads of all executive departments and agencies ordering them to halt all non-emergency rulemaking and regulatory activity issued under the previous administration pending review by
Businesses engaging independent contractors have new guidance from the Department of Labor (DOL) for determining whether an individual is an employee or independent contractor, but the guidance may never take effect. On January 6, 2021, the DOL issued a final rule for determining whether an individual is an employee or independent contractor. The rule focuses on whether workers are economically dependent on another business–making them more likely to be an employee of that business, and entitled to the minimum wage and overtime under the Fair Labor Standards Act (FLSA)–or are economically dependent upon themselves, making them true independent contractors.
Continue Reading DOL Announces Final Rule for FLSA Worker Classification Focused on Economic Dependence-But Its Future is Uncertain
The federal guidance on whether to classify a worker as an employee or an independent contractor continues to shift, as the U.S. Department of Labor (DOL) issued a new proposed rule favorable for companies. If finalized, the rule may provide businesses with greater latitude to engage independent contractors.
Continue Reading New DOL Proposed Rule Makes It Easier For Companies to Engage Independent Contractors
As predicted, on Friday, California Governor Newsom signed AB 2257 into law. The most significant changes are expanding the exemptions to AB 5’s coverage, that is, widening the range of occupations that will be held to an earlier standard for determining employment status. The new law takes effect immediately. For our coverage of AB 2257,
A potential amendment to California’s AB 5 law is sitting on Governor Newsom’s desk. If enacted, the amendment will allow certain professions to be classified as independent contractors rather than employees, notwithstanding AB 5’s presumption of employment status. On August 31, the California legislature sent AB 2257 to Governor Newsom for his review and signature. Supporters of the bill expect Newsom to sign it into law next month, especially given AB 5’s perceived negative impact on the “gig” economy during the pandemic. If signed by the governor, the law will take effect immediately.
By way of brief reminder, AB 5 established a 3-part test, known as the “ABC” test, that is used to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business. This broad test places most workers in the employee classification. AB 5, however, enumerated a few limited exemptions for specified occupations and business relationships from the application of the ABC test, providing that the exempt relationships are governed by the pre-AB 5 multi-factor test set out in S. G. Borello & Sons, Inc. v. Department of Industrial Relations. (For more detail on AB 5, click here.)
AB 2257 will modify some of the current exceptions to AB 5, and create new exceptions to AB 5’s presumption that workers are employees. A close read of the bill’s text is necessary given the proposed amendments’ nuances and sometimes conflicting detail. We outline below some of the major changes contemplated by AB 2257, but if your business potentially falls into one of the enumerated exceptions, we strongly recommend consulting with employment counsel given the complexities involved.
If enacted into law, AB 2257 will allow the following professionals to be classified as independent contractors in California if they satisfy the Borello standard.
Continue Reading Big Changes Coming To California’s Landmark Independent Contractor Law? Sort of.
Layoffs, reduced schedules, sick leave, and telecommuting—these are just a few of the issues that employers are navigating as they quickly adapt to the effects of the global pandemic. While moving full speed seems to be the only way to keep up with the rapidly-evolving landscape, companies should take a moment to ensure that they
On February 10, 2020, United States District Judge Dolly M. Gee denied a motion for a preliminary injunction to enjoin California from enforcing Assembly Bill 5 (AB 5) against Postmates Inc. and Uber Technologies, Inc. Judge Gee concluded: “Plaintiffs have not shown serious questions going to the merits — the critical factor in determining whether to issue a preliminary injunction — and, though company plaintiffs have shown some measure of likelihood of irreparable harm, the balance of equities and the public interest weigh in favor of permitting the state to enforce this legislation.”
Continue Reading Court Denies Preliminary Injunction To Halt California’s New Statutory “ABC Test” As To Gig Economy Companies And Drivers
