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Federal Register / Vol. 86, No. 86 / Thursday, May 6, 2021 / Rules and Regulations
balancing test to assess whether the worker, as a matter of economic reality, is economically dependent on the employer or is in business for him or herself.86 Courts universally apply this analysis as well and have explained that economic reality rather than technical concepts is the test of employment under the FLSA.87 WHD
and the U.S. Courts of Appeals generally consider and balance the following economic realities factors, derived from the Supreme Courts decisions in Silk, 331 U.S. at 716, and Rutherford Food, 331 U.S. at 72930: The nature and degree of the employers control over the work; the permanency of the workers relationship with the employer; the degree of skill, initiative, and judgment required for the work; the workers investment in equipment or materials necessary for the work; the workers opportunity for profit or loss;
whether the service rendered by the worker is an integral part of the employers business; and the degree of independent business organization and operation.88
The Rule would have set forth a new articulation of the economic realities test, elevating two factors control and opportunity for profit or loss as core factors above the other factors, and designating them as having greater probative value.89 The Rule would have provided that only in rare cases would the other factors outweigh the core factors.90 Notably, the Rule would have further provided that if both core factors point towards the same classificationthat the worker is either an employee or an independent contractorthen there would be a substantial likelihood that this is the workers correct classification.91 In addition, the preamble to the Rule disagreed with court precedent that, as a general matter, the economic realities test requires factors to be unweighted or equally weighted. 92 Although the Rule would have identified three other factors as additional guideposts, it made clear that these other factors are less 86 See,
e.g., Fact Sheet 13 July 2008, supra note
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87 Goldberg, 366 U.S. at 33; see also Tony & Susan Alamo, 471 U.S. at 301 The test of employment under the Act is one of economic reality.
quoting Goldberg, 366 U.S. at 33.
88 See, e.g., Razak, 951 F.3d at 14243; Karlson, 860 F.3d at 1092; Keller v. Miri Microsystems LLC, 781 F.3d 799, 807 6th Cir. 2015; Lauritzen, 835
F.2d at 1534; Real, 603 F.2d at 754; Fact Sheet 13
July 2008, available at https www.dol.gov/sites/
dolgov/files/WHD/legacy/files/whdfs13.pdf last visited April 28, 2021.
89 86 FR 124647 795.105c & d.
90 86 FR 1201.
91 Id. at 1246 795.105c.
92 Id. at 1197.

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probative and, in some cases, may not be probative at all, and thus are highly unlikely, either individually or collectively, to outweigh the combined probative value of the two core factors. 93 Similarly, the Rule would have provided that unlisted additional factors may be considered, but that they are unlikely to outweigh either of the core factors. 94 The Rule noted that while all circumstances must be considered, it does not follow that all circumstances or categories of circumstance, i.e., factors, must also be given equal weight. 95 Rather, the Rule would have emphasized the control and opportunity for profit or loss factors as more probative than other factors in determining whether an individual is in business for him or herself, and would have provided that other factors are less probative and may have little to no probative value in some circumstances. 96
In the proposal to withdraw the Rule, the Department expressed concern that no court has taken the Rules approach in analyzing whether a worker is an employee or an independent contractor under the FLSA, that the Rule would mark a departure from WHDs own longstanding approach, and that the Rule was in tension with the Acts text and purpose.97 Among other things, the Department noted that the Rules elevation of only two factors may be inconsistent with the position, expressed by the Supreme Court and federal courts of appeals, that no single factor in the analysis is dispositive and that the totality-ofthe-circumstances must be considered.98
Multiple commenters who supported withdrawal of the Rule criticized the Rules focus on only two factors as departing from the Acts text and purpose, as well as relevant case law.
The AFLCIO, for example, noted that by focusing on control and opportunity for profit or loss, the Rule would, in practice, adopt the common law 93 Id.

at 1246 795.105c.
at 1197.
95 Id. at 1201 internal quotation marks omitted.
96 Id. at 1202.
97 See 86 FR 1403233.
98 See, e.g., Silk, 331 U.S. at 716 explaining that no one factor is controlling in the economic realities test, including degrees of control;
Parrish, 917 F.3d at 380 stating that it is impossible to assign to each of these factors a specific and invariably applied weight citation omitted; Selker Bros., 949 F.2d at 1293 It is a well-established principle that the determination of the employment relationship does not depend on isolated factors . . . neither the presence nor the absence of any particular factor is dispositive.;
Dole v. Snell, 875 F.2d 802, 805 10th Cir. 1989 It is well established that no one of these factors in isolation is dispositive; rather, the test is based upon a totality of the circumstances..
94 Id.

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standard contrary to congressional intent and Supreme Court precedent.
The American Federation of State, County, and Municipal Employees AFSCME agreed that there is no reason to elevate the control factor above others, and a coalition of State Attorneys General and other officials State Officials commented that this prioritization of only two factors jettisoned the definition of employment that flexibly accounts for the full details of a working relationship, as decades of precedent require. The Northwest Workers Justice Project asserted that the Departments Rule would administratively amend the FLSA by placing undue weight on two factors and that the Rule also narrowed those two factors in a way that would undermine the Acts statutory intent and that is in tension with judicial precedent; Rep. Grace Napolitano added that the Rules weighting of two factors conflicted with congressional intent.
The Womens Law Project concurred that by according greater weight to only two factors instead of allowing the economic realities test to continue to be applied as a balancing test, the Rule was inconsistent with the intent of the Act and judicial and administrative precedent. Finally, the International Brotherhood of Teamsters stated that by giving these two factors preeminent status over the other factors, the Rule would make it more difficult for workers to prove they are employees.
Commenters opposed to withdrawal of the Rule generally supported giving two core factors greater weight in the analysis. For example, the American Bakers Association noted approvingly the Rules determination that the control and opportunity for profit or loss factors should be afforded greater weight because this weighting of the factors would be consistent with the outcomes of prior court decisions applying an economic realities analysis. The OwnerOperator Independent Drivers Association also shared its support of the Rules decision to afford the control and opportunity for profit or loss factors greater weight in the classification determination. Relatedly, commenters such as the Coalition to Promote Independent Entrepreneurs stated that the additional weight accorded to these two factors was not intended to alter the economic realities analysis but rather reflected the Departments review of prior court decisions applying the test, and thus there is no inconsistency between this position and the longstanding Supreme Court tenet that no single factor be dispositive. Other commenters
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