The advocacy arm of the World Floor Covering Association (WFCA) played an important role in the revision of a 2021 independent contractor rule, an issue hugely consequential to the thousands of flooring retailers who hire subcontractors for their installation jobs.
On Jan. 10, 2024, the U.S. Department of Labor (DOL) published a final rule, effective March 11, 2024, revising the Department’s guidance on how to analyze who is an employee or independent contractor. This final rule rescinds the Independent Contractor Status Under the Fair Labor Standards Act rule that was published on Jan. 7, 2021, and replaces it with an analysis for determining employee or IC status that aligns with longstanding judicial precedent on which employers have previously relied to determine a worker’s status.
The rule addresses six factors that guide the analysis of a worker’s relationship with an employer, including:
- Opportunity for profit or loss depending on managerial skill; Investments by the worker and the potential employer;
- The degree of permanence of the work relationship;
- The nature and degree of control;
- The extent to which the work performed is an integral part to the potential employer’s business; and
- The worker’s skill and initiative
WFCA submitted a 50-page comment, which was cited by the DOL 15 times in its final ruling. “The WFCA is proud of the impact it had on the DOL’s new rule on determining who is an employee and who is an independent contractor,” Jeffrey King, WFCA attorney, told FCNews. “We did not get all the changes, but we saw substantial revisions. While the final rule is far from favorable, many of the changes WFCA proposed were adopted in final rule.”
For example, WFCA opposed the rule that an independent contractor’s investment in its business could not include tools, equipment or vehicles. The rule now allows tools and equipment to be included in the investment, recognizing they impact the type of work a contractor can perform, can reduce costs, can expand market or risk profit or loss. Similarly, the final rule eliminated the original proposal that simply said “complying with legal obligations” could show control over the contractors’ work. There were other major changes made to the final rule that WFCA advocated for as well.
King, who serves as special counsel for the law firm Jones Walker LLP, said the final rule is being challenged in the courts; it is uncertain if it will take effect on March 11, 2024, as scheduled.
The IC vs. employee matter is of extreme importance to dealers since most use subs, which in this case would be an independent contractor. The biggest challenge many retailers face is the cost of worker’s comp insurance and other insurances it might have to pay if these individuals were deemed employees.
Retailers weigh in
Some flooring dealers have said that if their subs were considered employees by law—forcing them to pay out thousands of dollars on comp insurance or hire them as full-time employees—it would devastate their business. For now, the new guidance eases the burden on flooring dealers.
“This is such a big issue for retailers, and the WFCA is the only organization that could step up and actually get something done,” Janice Clifton, co-owner of Abbey Carpets Unlimited, Napa, Calif., and WFCA board member, told FCNews. “The rule about ‘tools and vehicles’ counting as investment in their business was a huge win. WFCA continually works for the independent retailer; their work is often not recognized for how significantly it helps our industry.”
Typhannie Harker, owner of Carpeting by Mike in Somerset, Wis., is a WFCA board member who traveled to Washington last summer with fellow retailers to meet with lawmakers on Capitol Hill. “We came together as small businesses, as one voice, and met with many decision-makers on behalf of the floor covering industry,” Harker said. “This is what the World Floor Covering Association stands for. Without our presence known—and our voices heard—the impact on the DOL ruling could have been dire for many small businesses. It would have changed the industry—and not for the better. I am proud to be part of the WFCA, part of the one voice, to advocate for this industry.”
What is “unique and essential” about the WFCA is its willingness to advocate for the flooring industry on any number of issues, according to Lauren Voit, president of Great Western Flooring, Naperville, Ill., a WFCA board member. “No other flooring trade organization that I am aware of supports the industry in this way,” she said. “With the strategic move to grow our membership, the WFCA presently represents a large population on a national level and our voice is now heard throughout the Capitol. I look forward to seeing additional progress in other areas we are advocating for—including skilled labor within the trades and how the immigration crisis can help to solve for this and other service industries.”
