Amy DeBisschop
Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor

 Comments on RIN 1235-AA43: Employee or Independent Contractor Classification under the Fair Labor Standards Act

Dear Ms. DeBisnaomischop:

The National Employment Lawyers Association (NELA) submits these comments in support of the U.S. Department of Labor’s (DOL’s) Notice of Proposed Rulemaking (the Proposed Rule) on the status of independent contractors under the Fair Labor Standards Act (FLSA).

Introduction

NELA is the largest professional membership organization in the country comprised of lawyers who represent employees in labor, employment, wage and hour, and civil rights disputes. Our mission is to advance employee rights and serve lawyers who advocate for equality and justice. NELA and its 69 circuit, state, and local affiliates have a membership of over 4,000 attorneys. NELA has filed numerous amicus curiae briefs before the United States Supreme Court and other federal appellate courts, as well as comments on relevant Notices of Proposed Rulemaking. Our members are the lawyers who represent workers who are misclassified as independent contractors, and consequently deprived of the most basic protections of the FLSA and other employment and civil rights laws. Thus, NELA has both an interest in, and unique expertise regarding the practical impact of the Department’s proposed rule.

NELA supports the October 13, 2022 Rulemaking. Most importantly, the Proposed Rule will benefit workers by correcting the January 2021 rule’s anti-worker, pro-employer bias. The January 2021 rule has circumscribed FLSA coverage such that it will protect an even a smaller subset of workers than those covered by the common-law test, which is contrary to Supreme Court precedent. Estimates suggest

the January 2021 rule cost workers billions of dollars annually in reduced pay and benefits.[1] As the Department has recognized, the January 2021 Rule is “not supported by the Act’s text or purpose or judicial precedent.” Independent Contractor Status Under the Fair Labor Standards Act (FLSA): Withdrawal, 86 Fed. Reg. 24303, 24307 (May 6, 2021). If the Proposed Rule made no other change, correcting the errors of the January 2021 rule alone would be an indispensable improvement over the status quo.

However, the Proposed Rule, while improving on the January 2021 rule, remains confusing. Its laudable effort to navigate 75 years of case law leaves a series of ever-evolving hurdles in the way of employees seeking a fair day’s pay for a fair day’s work. And it preserves – and at times reinforces – “technical concepts” that often result in misapplication of the multi-factor test in ways that are both adverse to working people and contrary to the rule’s purpose.  NELA’s comments are guided by the idea that simplicity and definitiveness helps workers achieve security and stability. The Proposed Rule, with some amendments, can achieve that goal.

I. The Complexity of the Multi-Factor Approach Undermines the FLSA’s Purpose.

Although the economic-reality analysis identified by the Supreme Court is meant to cut through “technical concepts” to ensure broad coverage of workers, United States v. Silk, 331 U.S. 704, 713 (1947), it has developed over 75 years into another set of increasingly technical concepts. This is unfaithful to the FLSA, and it is unfaithful to the Supreme Court’s understanding of how the law was written. A simpler test would remedy that problem.

In its comments on the Department’s January 2021 independent-contractor rule, NELA argued that the multi-factor economic reality test has not sufficiently prevented misclassification of American workers or provided clarity to employers. This argument is not speculative; it is based on the experiences of hundreds of NELA members who have represented thousands of clients in wage and hour cases in which misclassification is the key legal issue. We pointed out that the test suffers from inconsistent results and is simply too complicated to yield fair, equitable outcomes that conform to the spirit of the FLSA. That lack of clarity can be directly measured by the prevalence of litigation of these issues – inconsistent application means different minds will reach different conclusions. This hurts all parties. Neither workers nor their employers should need a team of lawyers to determine if a worker is misclassified.

NELA also argued that the January 2021 rule, which purported to simplify the multi-factor test, incorrectly emphasized pro-employer analyses and did not address features of the test that make it too complicated and cumbersome. The result was a rule that was not simpler than the existing body of case law, and was far less protective of workers, in direct contravention of the FLSA’s purpose. Instead, NELA advocated for the Department to adopt the “ABC” test, which many states have adopted to distinguish between independent contractors and employees. We continue to believe that the ABC test is the best approach for American workers. Nevertheless, we offer this comment on the Proposed Rule as written, in an effort to make it more workable for our clients.

NELA continues to disagree that the Department must adhere to the specific factors that have evolved to implement to “economic realities” approach established by Supreme Court precedent. While it is the province of the judiciary to “say what the law is,” Marbury v. Madison, 5 U.S. 137, 177 (1803), the Supreme Court has done that, by articulating the principle of economic reality; identifying the core inquiry of whether the worker is dependent on their employer; and distinguishing the FLSA’s employment test from “technical concepts pertinent to an employer’s legal responsibility to third persons for the acts of his servants.” United States v. Silk, 331 U.S. 704, 713 (1947). The Supreme Court has never held that the factors described in Silk are the exclusive way to analyze “economic reality.” The Proposed Rule recognizes as much. Employee or Independent Contractor Classification Under the Fair Labor Standards Act, “Additional factors,” 87 Fed. Reg. 62218, 62275 (October 13, 2022). The twists and turns of the law at the circuit-court level have shown that a complex multi-factor test easily morphs into “technical concepts” or “isolated factors” that allow judges to pick and choose which facts they find most compelling, with little consistency. The ABC Test is another lens through which to analyze the underlying economic realities – and an unquestionably clearer one for American businesses and workers alike.

II. The FLSA Creates A Presumption of Employment.

The Department’s commentary to the Proposed Rule repeatedly emphasizes the “striking breadth” of the FLSA’s definition of “employee” and Congress’s intent to “reach . . . work relationships that were not previously considered to constitute employment relationships[.]” 87 Fed. Reg. 62218, 62220, 62234. Relying on Supreme Court precedent, the Department also notes that “[t]he determination of whether a worker is covered under the FLSA must be made in the context of the Act’s own definitions and the courts’ expansive reading of its scope,” and that “merely putting on an independent contractor label does not take [a] worker from the protection of the [FLSA].” Id. at 62220, 62234 (internal quotation marks omitted). 

Accordingly, in light of the Act’s sweeping definitions and Congressional intent, the Rule should clarify that all workers who provide services for an employer are presumptively covered employees under the FLSA unless the employer shows that they are independent contractors. This comports with the breadth of the FLSA’s “suffer or permit to work” definition and is consistent with the Department’s past observation that “most workers are employees under the FLSA,” Administrator’s Interpretation No. 2015-1, at 2 (July 15, 2015). See Dynamex Operations W., Inc. v. Super. Ct., 416 P.3d 1, 35 n.24 (Cal. Sup. Ct. 2018) (interpreting “suffer or permit” standard under California law and holding that “the expansive suffer or permit to work standard is reasonably interpreted as placing the burden on a hiring business to prove that a worker the business has retained is not an employee who is covered . . . but rather an independent contractor . . . .”); cf. N.L.R.B. v. Kentucky River Community Care, Inc., 532 U.S. 706, 710-11 (2001) (the burden of showing that an employee is in fact a supervisor under the NLRA “is borne by the party claiming that the employee is a supervisor”).

III. The Economic Reality Factors

Perhaps the most important aspect of the Proposed Rule is its recognition that the “economic reality” approach is, at its core, an inquiry into “whether the worker is economically dependent on the employer for work or is in business for themself.” To the extent that courts have at times applied the economic reality test in inconsistent ways, this has often resulted from a failure to apply the factors within the dependency rubric. Failing to apply the factors in light of the overarching concern leads to them becoming “isolated” and inconsistent with a test that considers the “circumstances of the whole activity.” Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947). The Proposed Rule’s analysis of specific factors goes some distance to reinforce that principle. It can accomplish that purpose more fully by providing firmer guidance and avoiding certain missteps, as described below.

      A. Opportunity for Profit and Loss Depending on Managerial Skill

The Department’s commentary on the Proposed Rule provides helpful guidance. It is important that the Rule itself include more of that guidance in its text because the commentary in the Federal Register is unlikely to be heeded by courts. That added guidance will help simplify an otherwise murky inquiry.

The Proposed Rule does not clearly delineate the difference between an opportunity for profit and “decisions by a worker that can affect the amount of pay that worker receives, such as the decision to work more hours or take more jobs,” which “generally do not” indicate independent contractor status. 87 Fed. Reg. 62218, 62275-76. It is not enough to simply describe this distinction as a function of “managerial skill,” as the Proposed Rule does. That is abstract and confusing.[2] There is a simpler point: profit and loss go together.  A worker who can experience “profit” with no attached risk of business loss is not truly in business for themselves. Being in business entails both risks and rewards. The Final Rule should incorporate this clear guidance from the commentary that reflects this concept:

• “The fact that a worker has no opportunity for a loss indicates employee status. Workers who incur little or no costs or expenses, simply provide their labor, and/or are paid hourly, piece rate, or flat rate are unlikely to experience a loss.  This factor suggests employee status in those circumstances.” 87 Fed. Reg. 62218, 62238-39.

The Proposed Rule should also incorporate the flip side of the rule suggested above: the chance for a “loss” with no corresponding opportunity for profit is a sign of dependence on the employer, which points toward employee status. As discussed under the “Investment” prong below, these facts more likely suggest that the employer is taking advantage of the independent contractor label to shift operating costs to the worker – an outcome that reflects a lack of independent choice on the worker’s part.

Furthermore, the Final Rule should clarify what constitutes a business loss. NELA proposes the following language be added to the Final Rule (added text in boldface):

• “The fact that an employer may impose fines, penalties, or chargebacks on a worker for faulty performance does not mean that the worker may experience a loss. These kinds of costs are likely to make workers more dependent on their employers, and therefore more like employees.” 87 Fed. Reg. 62218, 62239.

Similarly, one of the relevant facts identified in the proposed rule – whether the worker accepts or declines jobs or chooses the order and/or time in which the jobs are performed – must be clarified to differentiate workers who are given illusory choices by employers who are attempting to obfuscate employee status. Workers who can accept or decline jobs from a list of employer pre-authorized jobs do not exercise managerial skill in doing so. Similarly, where employers use economic carrots and sticks in the form of bonuses or fines to influence the worker’s choice, the employer interferes with the worker’s exercise of managerial skill, forcing them to be dependent on the employer. As the commentary notes, this is consistent with a line of Fifth Circuit cases that looks at “the degree to which the worker’s opportunity for profit or loss is determined by the employer.” 87 Fed. Reg. 62218, 62238. As a result, NELA proposes the following modification to this language in the Proposed Rule (added text in boldface):

• … whether the worker exercises managerial skill in accepting or declining jobs without employer input or chooses the order and/or time in which the jobs are performed independent from employer control … 87 Fed. Reg. 62218, 63374.

Profit must be derived from managerial skill, not simply being good at the job performed by the worker. The commentary provides helpful guidance by differentiating technical proficiency in the task the worker performs from true “managerial or entrepreneurial prowess.” Scantland v. Jeffry Knight, Inc., 721 F.3d 1308, 1317 (11th Cir. 2013). NELA therefore proposes to include the following language in the Rule (added text in boldface):

• “[A] worker’s technical proficiency in completing each job [is] not the type of managerial skill that would indicate independent contractor status. Managerial skill will typically affect opportunity for profit or loss beyond a given job, and will relate to the worker’s business as a whole.” 87 Fed. Reg. 62218, 62239.

      B. Investments by the Worker and the Employer

The Department’s proposed regulatory text on the “Investments” prong adds focus and clarity by describing the nature of a business-like “investment,” and by emphasizing the relative-investment approach used in many circuits.  But both aspects of the rule need further explanation to be effective.  As written, they threaten to undermine one another.

1. Investments vs. Tools

The Proposed Rule correctly focuses on whether investments are capital or entrepreneurial in nature, as opposed to being costs (such as tools and equipment to perform the job). But the Proposed Rule should provide more guidance on how to make that distinction. The Department’s decision to separate the “investment” prong from the “opportunities for profit and loss” prong, see 87 Fed. Reg. 62218, 62240-41, goes too far, and detracts from that needed clarity.  An expenditure is only an “investment” when it may impact profit and loss. If an employee has spent money for work but has no opportunity for profit and loss as a result, then the conclusion should be that they are not “investing” in anything – the employer is just shifting operating costs to the worker while the employer keeps the profit, which means that the worker is dependent on the employer and points toward employee status. The Proposed Rule should be edited to clarify that “investment” inherently implies the possibility of profit and is only “capital or entrepreneurial in nature,” 87 Fed. Reg. 62218, 62275, when it has a nexus with profit and loss.[3]

2. The Relative-Investment Analysis

The Proposed Rule is correct to incorporate a relative-investment analysis under the “Investments” prong. But it provides little guidance on how to conduct that analysis. The result is that this part of the test is disconnected from the guidance saying that investments must be entrepreneurial in nature. This disconnect should be remedied, and the Department should explain that the relative-investment analysis is qualitative, not quantitative, to better align this prong with the overarching dependence/independence inquiry.

A qualitative review of relative investments helps determine whether the investment is entrepreneurial in nature. Someone must make the entrepreneurial decisions in a business, and asking whether that person is the worker or the employer will help identify which decisions are in fact “entrepreneurial.” An analysis that instead focuses on a quantitative comparison of investments is rarely conclusive, because not all industries are equally capital-intensive.  Moreover, the threshold question of which expenditures are entrepreneurial “investments” versus “tools” makes quantitative comparison confusing and inconclusive. As explained above, an investment is entrepreneurial if it has a nexus with profit and loss. That is true for the relative-investment aspect of the test too. By examining the investments made by both the hiring party and the worker, a factfinder can better identify which investments are the key drivers of profit (and loss). See, e.g., Usery v. Pilgrim Equip. Co., 527 F.2d 1308, 1313-14 (5th Cir. 1976) (concluding that apparent “investments” were in fact “nothing more than a method of settling accounts between outgoing and incoming operators.”); Martin v. Selker Bros., Inc., 949 F.2d 1286, 1294-95 (3d Cir. 1991) (gas station operators had “no capital investment in gasoline,” which was the largest item of value they sold, because employer reimbursed them and purchased excess inventory); Dole v. Snell, 875 F.2d 802, 810 (10th Cir. 1989) (relative investment of cake decorators in their own tools did not qualify as an investment when compared with business owner’s investment in risk capital such as retail outlet, cakes, advertising, utilities, and other employees). 

The Proposed Rule should make clear that in comparing the relative investment of the worker and the hiring entity, the factfinder’s goal is to distinguish between “entrepreneurial” investments that affect profit and loss; that what matters most is investment in one or more of the driving factors of profitability; and that when the employer invests in those key determinants, any costs borne by the worker are simply another signifier of their dependence on the employer, and should weigh in favor of employee status.

C. Degree of Permanence of the Work Relationship

In the commentary to the Proposed Rule, the Department provides helpful examples of what permanence looks like in varying economic contexts. NELA proposes that some of the commentary be included in the rule text. These examples should follow – and will help explain – the Rule’s reference to “operational characteristics that are unique or intrinsic to particular businesses or industries and the workers they employ.” 87 Fed. Reg. 62218, 62275.

In addition to describing seasonal or temporary work in the Rule, the Department should include specific examples of trades that are seasonal or temporary but are still consistent with an employment relationship. These examples, noted in the commentary, include (1) agricultural work; (2) seasonal retail businesses; (3) temporary staffing agencies; and (4) seasonal construction work. 87 Fed. Reg. 62218, 62244. The Department should make clear that these are examples, not an exhaustive list.

In light of these exceptions, as well as the increasing prevalence of contingent and temporary work engagements, the Proposed Rule’s language describing employment-like permanence as “indefinite in duration or continuous” insufficiently captures the relevant concept.  NELA suggests the following alternative wording (added text in boldface): 

• “This factor weighs in favor of the worker being an employee when the work relationship is indefinite in duration, regular, repeated, or continuous, so as to induce reliance on the part of the worker for continued income. This factor weighs in favor of the worker being an independent contractor when the work relationship is definite in duration, non-exclusive, project-based, or sporadic, thereby enabling the worker to build their own independent business by marketing their services or labor to multiple entities.” 87 Fed. Reg. 62218, 62275.

This test provides clearer guidance on whether a worker is in business for themselves, despite variations in the “operational characteristics” of their industry.

D. Nature and Degree of Control

The Department’s commentary to the Proposed Rule states that the proposed rule will “provid[e] additional analysis of the control factor, including detailed discussions of how scheduling, supervision, price-setting, and the ability to work for others should be considered when analyzing the degree of control over a worker, and not limiting control to control that is actually exerted.”  See 87 Fed. Reg. 62218, 62233.  However, the examples and discussion set forth in the text of the rule are scant.  In contrast, the numerous examples and detailed discussion in the Department’s commentary at 87 Fed. Reg. 62218, 62246-53 are instructive and should be incorporated into the rule itself. 

To frame these concepts, the Rule should contain text stating that the focus should be:

• “on whether the employer still retains control over meaningful economic aspects of the work relationship such that the control indicates that the worker does not stand apart as their own business, not simply whether the employer lacks control over discrete working conditions . . . or . . . failed to exercise physical control over the workplace[.]” 87 Fed. Reg. 62218, 62246.

These “meaningful economic aspects of the work relationship” include all of the specific subtopics – scheduling, supervision, price-setting, and the ability to work for others – identified above.  NELA further recommends that the Department break out each form of control in the text of § 795.110(b)(4) and provide discussion and examples of each form of control as set out below, rather than attempting to fit its analysis into one long paragraph. Those subsections should include the following guidance:

1. Quality Control/Legal Compliance Requirements.

The Rule should state that these forms of control are relevant and must be considered because what matters is the “nature and degree of the alleged employer’s control, not why the alleged employer exercised such control.” Scantland, 721 F.3d at 1316. When the employer, rather than the worker, controls compliance with legal, safety, or other obligations, it is evidence that the worker is not in fact in business for themselves because they are not doing the risk-management work involved in understanding and adhering to the legal and other requirements that apply to the work they perform and are not assuming the risk of noncompliance.

2. Supervision, including by reliance on technology.

The Rule should state that while an employer’s close supervision of a worker on the job is strong evidence of an employer-employee relationship, traditional forms of in-person continuous supervision are not required. See, e.g., Brock v. Superior Care, 840 F.2d 1054, 1060 (2d Cir. 1988). The nature of the business or the work may make direct supervision infeasible, such as for remote work, or unnecessary, such as for low-skilled work, see Acosta v. Off Duty Police, 915 F.3d 1050, 1061-62 (6th Cir. 2019); or the employer may employ methods of supervising the work that are equally indicative of its control, such as through technology that tracks and monitors workers as they perform their jobs. 

3. Scheduling.

The Rule should state that while an employer’s ability to set the schedules of workers is strong evidence of an employer-employee relationship, the absence of direct scheduling control provides only minimal evidence that the worker is an independent contractor, because flexibility in work schedules is common to many businesses and is not significant in and of itself. See, e.g., Pilgrim Equip., 527 F.2d at 1312. Where the employer has more control in other ways such as price setting, scheduling flexibility is less relevant to an independent contractor relationship.

4. Price or Rate Setting.

The Rule should state that it is strong evidence of employee status when an entity other than the worker sets a price or rate for the goods or services offered by the worker, or where the worker simply accepts a predetermined price or rate without meaningfully being able to negotiate it.  See, e.g., Goldberg v. Whitaker House Coop., 366 U.S. 28, 32 (1961).

5. Ability to Work for Others.

The Rule should state that the ability to work for others is not evidence of the worker’s control if the worker is dependent on the employer for work in order to earn a living.  The mere fact that an employer allows workers to work for others does not transform an employee into an independent contractor.  See, e.g., McLaughlin v. Seafood Inc., 867 F.2d 875, 877 (5th Cir. 1989).

E. Extent to Which the Worker is Incorporated Into an Integrated Business Unit.

The Proposed Rule misreads the “integral to the business” prong.  The analysis in the present Rule would undermine the economic reality test and encourage more, not less, worker misclassification.

The January 2021 Rule had it right – this prong asks whether a worker is integrated into an enterprise.  The concept of integration is integral to the word “integral.”  “Integral” means “essential to completeness.”[4] It does not just mean “essential.” The Proposed Rule weakens this factor by equating it with whether work is “critical, necessary, or central” to the employer. 87 Fed. Reg. 62218, 62275. This invites employers to manipulate the rule by characterizing their business differently, focusing on labels rather than economic realities. 

The correct focus is clear in Rutherford Food Corp. v. McComb, 331 U.S. 722, 726 (1947), the case that first articulated this factor in detail. The workers in Rutherford were “part of the integrated unit of production.” This passage explicitly refers to a passage in the lower court’s decision, which was clearly describing the operation of employer’s operation as a whole, not the group of workers within the operation. See Walling v. Rutherford Food Corp., 156 F.2d 513, 516 (10th Cir. 1946) (“The operations at the slaughterhouse constitute an integrated economic unit devoted primarily to the production of boneless beef”). In other words, the cases say the workers were part of an integrated assembly line – not that the workers were critical or necessary to the business. No part of either decision uses the word “integral.”

The commentary to the Proposed Rule brushes this aside by citing United States v. Silk, 331 U.S. 704 (1947), which stated that unloaders and truckers were “an integral part of the businesses of retailing coal or transporting freight.” But Silk considered two different businesses, one a coal retailer, the other a trucking business. If the Proposed Rule were correct that the “integral” prong is about how central the work is to the core operation of a business, one would expect different conclusions as between these employers. A truck driver or loader is obviously central to a trucking business, but not necessarily to a retailer – consider how many retail businesses today outsource “last mile” delivery services. Under the Department’s rule, the coal retailer in Silk could have evaded this prong simply by characterizing itself as a coal wholesaler and outsourcing its delivery operation. 

Neither Rutherford nor Silk talk about how important the job is – i.e. whether it is “critical, necessary, or central to the employer’s principal business.” 87 Fed. Reg. 62218, 62275. That test, which the Proposed Rule puts forward, is ill-suited to an economy where outsourcing and fissured work are

common. Companies typically outsource operations that are less central (i.e. not critical or necessary) to their operation, but that does not fundamentally alter how dependent the workers are on the hiring business. Nor does it change the fact that those operations are in fact integrated into a larger enterprise. Attempting to grade work by how important it is to the employer simply invites value judgments about the work itself.   

Ultimately, both concepts are important, as reflected in the dictionary definition of “integral” quoted above. If a worker is integrated into the business’s operations, that is sufficient to indicate employment under this prong. If they also happen to be central or necessary to the business model, that should strengthen the conclusion that they are an employee. But how important a worker is to an employer should not be the focus of this factor.      

F. Skill and Initiative

The Proposed Rule helpfully refines the “skill and initiative” factor by focusing the inquiry on whether a worker’s use of specialized skills contributes to business-like initiative, rather than the presence or absence of specialized skills alone. However, the Rule would be strengthened by incorporating a few key principles from the commentary into the rule itself.

NELA agrees with the Department that the possession or employment of specialized skills itself does not indicate independent contractor status. But at present, the Rule leaves room for courts to consider the presence of specialized skill alone as an indicator of independent contractor status. Although the Proposed Rule correctly reestablishes the link between skill and business-like initiative as the raison d’etre of the factor, it does not make clear enough that the factor only points to independent contractor status when such a link is found.

NELA proposes that the following changes be made to the proposed “skill and initiative factor” (§ 795.110(b)(6)) itself:

• The last sentence of § 795.110(b)(6) should be amended as follows: “Where the worker brings specialized skills to the work relationship, it is only the worker’s use of those specialized skills in connection with business-like initiative that indicates that the worker is an independent contractor” (added text in boldface).
• The following sentences from the commentary, with only slight alteration, should be added to § 795.110(b)(6):
  • “The fact that workers are skilled is not itself indicative of independent contractor status.” 87 Fed. Reg. 62218, 62255 (quoting Superior Care, 840 F.2d at 1060).
  • “Both employees and independent contractors may be skilled workers. To indicate possible independent contractor status, the worker’s skills should demonstrate that [they] exercise[] independent business judgment.” 87 Fed. Reg. 62218, 62256.
  • For this factor to indicate independent contractor status, a worker must “use[] those specialized skills to exercise business-like initiative” in a way “that suggests that the worker is operating as an independent business.” Id.

This text will more fully capture the Department’s stated intent to focus this prong on the presence or absence of business-like initiative in relation to the skills applied by the worker.

Conclusion

Asking judges to evaluate concepts like “economic reality” is challenging because judges are not economists, sociologists, or experts in workplace governance. The FLSA was intended to cut through “technical concepts” to create a simple definition of “employ:” “suffer or permit to work…”  29 U.S.C. § 203(g). The Supreme Court read this definition for what it is: a broad coverage provision that could be applied using common sense and “economic reality”–not legal technicalities–to achieve its purpose. 

Left in the hands of law-trained judges, the “economic reality” principle has acquired an array of technical concepts over the course of 75 years. The Department has tried to return to the law’s roots by reminding us that the central inquiry is one of dependence. But by choosing to defer its expertise in the “economic reality” of employment to the “isolated factors” that judges have fashioned, the Department has created a need for increasingly extensive guidance to avoid a test that is self-contradictory and unmoored from the realities of the workplace.     

Nonetheless, because the law has led to missteps and the potential for missteps, that extensive guidance is needed. NELA supports a robust version of the Proposed Rule, with the changes described above, to assist employers, workers, and the teams of lawyers who represent them in making sense of “economic realities.”  

If you have questions regarding these comments, or difficulty opening the attachment, please contact Laura M. Flegel, Legislative & Public Policy Director, lflegel@nelahq.org.

Sincerely,

[1]           Letter from Robert C. “Bobby” Scott and Members of Congress to The Honorable Marty J. Walsh (April 12, 2021), https://edlabor.house.gov/imo/media/doc/2021-04-12%20Scott%20Adams%2076%20MOC%20Comment%20Letter%20re%20FLSA%20IC%20Rule%20Withdrawal%20(SIGNED%20FINAL).pdf.

[2]           Consider the prevalence of litigation over the FLSA’s exemption for bona fide executive employees. NELA members’ experience has been that these cases frequently center on competing characterizations of the same work and whether an employee is, for example, merely sweeping the floor or “managing” the sweeping of the floor.

[3]           “investment (noun): the outlay of money usually for income or profit; capital outlay.” Investment, Merriam-Webster.com Dictionary (November 28, 2022).

[4]           Integral, Merriam-Webster.com Dictionary (November 28, 2022).