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In early January 2021, the Trump administration created a new, employer-friendly regulation that would have made it easier (or at least provided clarity) for companies to classify workers as independent contractors. That rule was set to go into effect on March 8, 2021. However, on March 12, 2021, the new Biden administration slammed on the brakes, announcing its intention to withdraw the independent contractor regulation. On May 6, 2021, the Biden administration followed through and formally withdrew the regulation.
Prior to the now-rescinded rule, the U.S. Department of Labor and courts used the “economic realities” test to analyze whether a worker was correctly classified as an independent contractor. That test generally looked at six factors: (1) The degree of the employer’s right to control the manner in which the work is to be performed; (2) the worker’s opportunity for profit or loss depending upon his or her managerial skill; (3) the worker’s investment in equipment or materials required for his or her task, or employment of helpers; (4) whether the service rendered requires a special skill; (5) the degree of permanence of the working relationship; and (6) whether the service rendered is an integral part of the employer’s business.