Association Tells DOL Changes to Independent Contractor Rule Would Create Significant Uncertainty for Industry

Washington, D.C. – The National Restaurant Association recently submitted comments to the Department of Labor (DOL) in response to the Notice of Proposed Rulemaking: Employee or Independent Contractor Under the Fair Labor Standards Act (“Proposed Rule”). In the submission, the Association reconfirmed their support for the Department of Labor’s 2021 Final Rule and requested a withdrawal of the proposed change.

“The 2021 Final Rule allowed restaurants of all sizes to easily determine independent contractor status as the rule was clear, concise, and easy to understand,” said Jordan Heiliczer, director of Labor and Workforce Policy at the National Restaurant Association. “On the other hand, the classification approach defined in the Proposed Rule is so exceedingly complex and ambiguous that it will cause harmful confusion for restaurant operators and independent contractors across the country.”

The DOL published the 2021 Final Rule after analyzing relevant case law and evaluating thousands of public comments, including from the Association. The Final Rule promoted clarity by focusing on the two core factors most determinative of independent contractor status—the nature and degree of an individual’s control over their work and an individual’s opportunity for profit or lose.

The Proposed Rule would revert to a “totality of circumstances” approach based on a multifactor test, reintroducing inconsistency into the determination process. The six economic reality test factors in the Proposed Rule are exceedingly complex, subjective, and in many instances duplicitous, which will make it difficult for employers and independent contractors to accurately determine classification status without outside legal counsel.  Further, the Proposed Rule allows for the consideration of undefined “additional factors” adding an additional layer of ambiguity and uncertainty for restaurant operators to navigate and manage.

“The 2021 Final Rule worked as intended—it was easy to understand and allowed America’s small business owners and independent entrepreneurs to determine independent contractor status without requiring costly outside counsel,” said Heiliczer, director of Labor and Workforce Policy at the National Restaurant Association. “The Association vehemently disagrees with the Department of Labor’s assessment that the Proposed Rule will not increase the cost and burden of compliance. The Department of Labor shouldn’t be focused on enacting regulations that increase costs and uncertainty as businesses continue to struggle amid inflationary pressures and supply chain constraints—we urge them to reconsider and reinstate the 2021 Final Rule.”

The complete submission by the National Restaurant Association can be found here.