WASHINGTON, D.C., JAN. 6 – The International Franchise Association (IFA) today praised the Department of Labor’s (DOL) Independent Contractor Rule for its clear, even-handed approach to independent contractor policy.
The rule, released this morning, creates two “core factors” to guide employment status. These factors, “the nature and degree of control over the work” and “the worker’s opportunity for profit or loss based on initiative and/or investment,” can shape the determination of whether an individual is an independent contractor or an employee.
“This final rule reflects the reality of the modern economy and creates a framework where independent contractors can have the freedom to remain both flexible and self-employed,” said Robert Cresanti, IFA President and CEO. “Additionally, the rule is an important guide for states as they seek to implement their own independent contractor policies: by choosing this approach over the scattershot, litigation-riddled ABC test, they can better ensure economic success and worker choice.”
Notably, this rule makes clear that the franchise relationship is separate than an independent contractor relationship. Franchising’s unique nature, along with the Federal Trade Commission Franchise Rule and the Lanham Act, necessitates the clarity this rule provides.
In October 2020, IFA filed comments to the DOL in support of the initial proposed rule, noting that the proposed rule effectively acknowledges that the economic realities of franchising are different than for independent contractors.
Celebrating 60 years of excellence, education, and advocacy, the International Franchise Association is the world's oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations, and educational programs to protect, enhance and promote franchising and the more than 733,000 franchise establishments that support nearly 8.4 million direct jobs, $787.5 billion of economic output for the U.S. economy, and 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees, and companies that support the industry in marketing, law, technology, and business development.