The Department of Labor (DOL) released a final rule that will be effective on March 11^th that revises the determination as to whether an individual is an employee or independent contractor under the Fair Labor Standards Act (FLSA). The House of Representatives passed a Congressional Review Act resolution nullifying a joint employer rule issued by the National Labor Relations Board (NLRB). The Bureau of Labor Statistics (BLS) reported that jobs and wages increased in 2023. President Biden renominated Julie Su to be the Secretary of Labor, which requires Senate confirmation.

DOL Finalizes Independent Contractor Rule – The Department of Labor (DOL) issued a final rule  that will be effective on March 11, 2024, revising how to determine whether an individual is an employee or independent contractor under the Fair Labor Standards Act (FLSA). The final rule rescinds a previous independent contractor rule that was issued on January 7, 2021. According to the DOL, “This final rule will reduce the risk that employees are misclassified as independent contractors while providing a consistent approach for businesses that engage with individuals who are in business for themselves.”

The final rule provides that workers would not be considered as independent contractors if they are, as a matter of economic reality, economically dependent on an employer for work. The final rule identifies the following six factors that should be used to determine employee or independent contractor status under the FLSA:

1. Opportunity for profit or loss depending on managerial skill;
2. Investments by the worker and the potential employer;
3. Degree of permanence of the work relationship;
4. Nature and degree of control:
5. Extent to which the work performed is an integral part of the potential employer’s business; and
6. Skill and initiative.

DOL noted that the rule includes detailed definitions and guidance for each of the six factors. No factor or group of factors has a predetermined weight but rather a “totality of the circumstances analysis” should be undertaken when making the determination.

Senator Bill Cassidy, ranking Republican on the Senate Committee on Health, Education, Labor, and Pensions announced that he will introduce a Congressional Review Act resolution disapproving the rule with a companion resolution likely to be introduced in the House of Representatives. Business groups may file a lawsuit challenging the rule.   

Houses Passes Resolution Disapproving NLRB Joint Employer Rule – The House of Representatives passed a Congressional Review Act resolution (H.J. Res. 98) nullifying the final rule issued by the National Labor Relations Board (NLRB) titled Standard for Determining Joint Employer Status. This rule establishes a standard for determining whether two employers simultaneously employ an employee. The rule provides that if two employers share or together determine the essential terms and conditions of employment then they would be considered joint employers. A companion resolution (S.J. Res. 49) has been introduced in the Senate.

The Biden Administration indicated strong opposition to the passage of H.J. Res. 98, and if approved by the Congress, President Biden would veto it.  According to the Biden Administration, “Workers have the right to bargain for fair wages and working conditions with every company that directly or indirectly controls their terms and conditions of employment.” The rule issued by the NLRB is scheduled to take effect on February 26, 2024.

The Congressional Review Act requires federal agencies to submit final rules to Congress prior to the rules taking effect. Any member of Congress can introduce a joint resolution disapproving of an agency’s final rule, with a majority in both the House of Representatives and the Senate required to approve the resolution, which is then sent to the president who can either sign or veto it. Congress has 60 days from the date a rule is submitted to vote on the disapproval resolution.

A group of twelve business organizations led by the Chamber of Commerce filed a lawsuit on November 9^th in the United States District Court for the Eastern District of Texas challenging the new joint employer rule. The plaintiffs also filed a motion for summary judgment.

Jobs and Wages Increased in 2023 – The Bureau of Labor Statistics (BLS) reported that in 2023, employment rose by 2.7 million jobs, which represented an average monthly gain of 225,000 jobs. This was less than the increase of 4.8 million or 399,000 jobs per month in 2022. The unemployment rate finished the year at 3.7%. The labor underutilization rate, which includes those unemployed, plus persons marginally attached to the labor force (those who are currently neither working nor looking for work but want and are available for a job), plus those employed part-time for economic reasons was 7.1%. Health care and government showed significant increases in jobs last year. Construction, social assistance, leisure and hospitality, and professional services also added jobs last year either at similar or reduced rates as compared to 2022. Jobs in transportation and warehousing decreased in 2023. BLS also reported that over the past 12 months, average hourly earnings increased by 4.1%.

Julie Su Renominated – President Biden has renominated Julie Su to be Secretary of Labor. She serves currently as the Deputy Secretary of Labor. She was nominated last year to replace Marty Walsh as Secretary of Labor. Her nomination was never voted on due to a concern that she lacked the votes needed for confirmation. The nomination was referred to the Committee on Health, Education, Labor, and Pensions, which is chaired by Senator Bernie Sanders (I-VT) who supports the nomination.

Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues and was an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.