The realities of the ever-evolving American economy require that federal law clearly distinguish between when workers are employees and when they are independent contractors. A clear definition was established by the Department of Labor (DOL) in 2021. Unfortunately, this definition was rescinded by the Biden administration in 2024. Instead, DOL adopted a problematic six-factor test. Under the final regulation, no single factor is given more weight than the others, and the factors are not exclusive, making determination of worker classification under the FLSA dependent on a “totality of the circumstances” approach.
Retailers, like many other employers, rely on independent contractors for a wide range of essential services, including billing, facility maintenance, data analysis, delivery, marketing and more critical services. Any change to the definition of an independent contractor is significant because it determines coverage under federal wage-and-hour laws. When the applicability of the FLSA becomes muddied, millions of people who choose to operate as independent contractors — as well as the businesses that depend on their expertise — face uncertainty, operational disruptions and potential legal challenges.
Given the importance of the relationship between businesses and independent contractors, NRF is proud to support two pieces of legislation introduced by Rep. Kevin Kiley, R-Calif., that would support independent workers and enhance businesses' ability to partner with these individuals. The Modern Worker Empowerment Act modifies current federal labor laws to create a standard and consistent test for determining whether a worker is classified as an independent contractor or an employee. The Modern Worker Security Act creates a federal safe harbor, permitting companies to offer portable benefits to independent contracts.