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Federal Register / Vol. 86, No. 4 / Thursday, January 7, 2021 / Rules and Regulations amounts to a 10-year annualized cost of $43.5 million at a discount rate of 3
percent or $52.8 million at a discount rate of 7 percent.
SWACCA commented that regulatory familiarization costs were underestimated because they would not only be imposed upon adoption of a final rule but would be ongoing as stakeholders begin to understand whether and how it will be applied.
Additionally, they asserted the costs for businesses to familiarize themselves with the new guidance would exceed the cost of familiarization for the existing guidance, a claim that the commenter did not substantiate with data. The Department disagrees with this assertion. The rule is expected to reduce the time spent analyzing how the economic reality tests factors interact.
Accordingly, the Department reiterates that incremental regulatory familiarization costs in future years are expected to be de minimis.
A number of commenters expressed support for the cost estimates. The CGO
states that, As currently written, the proposed rule carefully quantifies the cost savings of reduced litigation and increased clarity. AFPF posited that, if anything, the calculations would tend to reflect an overstatement of regulatory familiarization costs.

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2. Other Costs 181
It is possible this rule will result in costs beyond the above described familiarization costs. In the NPRM, the Department invited comments and data on potential other costs of this rule. The Department received comments responsive to these requests which generally fell into seven categories:
Impacts to workers; impacts to tax revenues; impacts on competition;
impacts on income inequality and to minorities and women; tax filing;
implementation; and impacts on income stability. The Department evaluated all of the potential costs that were identified, and examined many of the citations provided. In general, the commenters did not provide ample data or other evidence to support their claims, and, upon review, the Department was unable to confirm or substantiate the proposed cost categories in its own research.
Therefore, in this section of the analysis, the Department addresses the points 181 Various commenters to the NPRM raised points that they considered costs, although those points may more accurately be defined as transfers under Executive Order 12866. To clearly address these points, the Department decided to address the following areas with the language used by commenters. For further discussion of related impacts, please see the Potential Transfers section.

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raised and discusses the qualitative merits, but does not quantify estimates for inclusion in its top line figures.182
Detailed explanations are presented in each category below, including discussion of the range of uncertainties and data limitations identified.
a. Additional Impacts to Workers Several commenters asserted that the NPRMs discussion of costs did not include a discussion of effects on workers beyond minimum wage and overtime pay. Ironworkers Local Union 7 stressed the importance of benefits such as workers compensation for the dangerous nature of the work of their members and other construction workers. The Center for Law and Social Policy CLASP noted that the rule could also impact other benefits based on the FLSAs definition of employment, such as access to paid sick leave in general and under the Families First Coronavirus Response Act FFCRA. The Washington Center, among others, contended it may also impact workers rights to join a union.
The International Brotherhood of Teamsters commented that the liquidated damages remedy for willful or bad faith violations of the FLSA is not available to workers who are classified as independent contractors.
Other commenters asserted that independent contractors are also not protected by the Federal antidiscrimination and health and safety statutes, and that the Department failed to consider this effect.183
These potential impacts do not change the Departments overarching view that workers as a whole will be better off as a result of this rule, even if some workers may not be better off.
Generally speaking, the above commenters raise points that fundamentally rest on the assumption 182 In some cases, commenters raised points that may very well impact certain individuals in specialized circumstances, but which are not, when aggregated across the economy as a whole, cumulatively significant or representative.
183 The Department has not conducted a thorough review of discrimination law at the Federal or state level for the purposes of this rulemaking, but notes that independent contractors are protected by at least some Federal anti-discrimination laws. See, e.g., 42 U.S.C. 1981. Further, the scope of these laws is not dependent on employee status under the FLSA. See, e.g., Gulino v. New York State Educ.
Dept, 460 F.3d 361, 379 2d Cir. 2006 The Supreme Court has given us guidelines for discerning the existence of an employment relationship in the race-discrimination context:
Traditional indicators of employment under the common law of agency.; Weary v. Cochran, 377
F.3d 522, 524 6th Cir. 2004 The proper test to apply in determining whether a hired party is an employee or an independent contractor under the Age Discrimination in Employment Act is the common law agency test. .

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that independent contractors cannot adequately assess their risks, needs, and goals. Furthermore, these commentators seem to assume that the listed features could be obtained by workers with no cost to the worker. The Department does not agree with such assessments. The Independent Womens Forum stated that the flexibility afforded by independent contracting is especially crucial for women who are the primary caregivers in their households.
Palagashvili; Independent Womens Forum Women find independent contracting appealing because of the flexibility, autonomy, and freedom it provides.. Nor did individual freelancer commenters, who repeatedly affirmed their ability to make rational decisions for themselves and their own businesses. One such commenter stated that I prefer the option to make my own schedule and decide how I want to proceed in making my money at my own discretion. Another explained that, as an independent contractor I
am free to choose when and where I
work. This is important to me as a caregiver for elderly relatives. As a final illustrative example, a freelancer stated that I have chosen this profession because of the freedom and flexibility it affords me. I also can earn more freelancing than I could working in a similar full-time job . . .. I am a far better judge of what is good for me than a politician in Washington.
Independent workers are a bedrock of the U.S. economy and are acutely aware of their own values and needs.
Fundamental to being an independent contractor is the ability to control ones own work, which enables workers to be the deciding factor in accepting or declining work that may be risky or not as rewarding. The commenters above did not cite or offer data to support their assumption that employees covered by the FLSA are intrinsically better off compared to genuine independent contractors who are not covered by the FLSA. Several commenters, notably CLASP and NWLC, who submitted comments related to the pandemic do not address the abundant data demonstrating that access to independent contracting has been essential for many workers attempting to balance responsibilities, especially for women and caregivers. Accordingly, to the extent the final rule will increase the frequency of independent contracting, the Department believes that workers will, on net, benefit from that option.

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