Page with FLSA fair labor standards act on a table.

Home care agencies beware: The Department of Labor is poised to release a proposed rule today that will make it easier for the department to find that caregivers have been misclassified as independent contractors, rather than employees.

Labor Secretary Marty Walsh said the proposed rule will provide better guidance to employers and help them avoid misclassifying employees. 

“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers,” Walsh said in a statement. “Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages. The Department of Labor remains committed to addressing the issue of misclassification.”

In a statement, the DOL singled out home care as one of nearly a dozen industries in which worker misclassification is a problem. The DOL will focus on whether a worker is economically dependent upon the entity sourcing the client for work or if the worker is in, in fact, in business for themselves, Polsinelli Law, which represents home care providers, said. The current test, which has been in effect since early last year, analyzes five factors but places emphasis on two factors: the nature and degree of control over work and the worker’s opportunity to profit or lose money based on personal initiative or investment.

“The new proposed rule will focus on the ‘economic reality’ of the worker’s situation, ultimately asking: Are they economically dependent upon the registry/entity sourcing the client for work (and therefore an employee) or are they in business for themselves (and therefore an independent contractor),” the law firm continued in a recent email alert. 

Polsinelli said the proposed rule will also focus on whether the worker is integral to a firm’s business. For instance, if the business is matching a caregiver with a client, then the caregiver is integral to that business and should be classified as an employee. 

The Department of Labor seeks comments on the proposed rule, which is published in the Federal Register. Comments may be submitted from today to Nov. 28, 2022, online or in writing to the Division of Regulations, Legislation and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Ave. NW, Washington, DC 20210.