USDOL rule would decimate Michigan’s gig economy, drive up costs

Last month, the US Department of Labor proposed changes to the Fair Labor Standards Act (FLSA) that would drive up costs and crush entrepreneurs in the gig economy, our nation’s small business community. Although the FLSA governs regulations for employees related to matters such as minimum wage, overtime, and record keeping, the rules and regulations previously did not apply to individuals classified as independent contractors. Under current rules, the parameters used to classify an individual as an employee, or an independent contractor, are relatively simple and clearly defined.

The proposed rule drastically changes the current tests used to determine whether an individual must be classified as an employee rather than as an independent contractor under the FLSA. Unlike the current rule set, the proposed rule attempts to expand the definition of an employee through the use of arbitrary, overly broad, and highly subjective language. The proposed rule would impose a new, six-factor test to determine whether an employer is “economically dependent” on an employer under the “totality of the circumstances.” Additionally, there is no predetermined weighting for each test. Fail one of the six tests and the individual worker can be reclassified as an employee by the federal bureaucracy.

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David Roy

Still confused? Well, you should, because the parameters of this proposed rule are extremely misleading and will pull the rug out from our small businesses and independent contractors who are doing well under the existing rules. That’s why the Michigan Small Business Association, of which I’ve been an active member for many years and served as its board chair, is advocating strongly against this rule change and encourages small business owners and allies across the state to join us.


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