WASHINGTON – The National Retail Federation welcomed regulations issued by the U.S. Department of Labor Wednesday that clearly define the difference between workers who must be considered employees and those who can be classified as independent contractors.

“These rules provide much-needed legal certainty for employers, employees and independent contractors nationwide,” NRF Senior Vice President for Government Relations David French said. “The complexities of the modern workplace, especially when combined with substantial ongoing technological changes, demand absolute clarity in this important area of employment law.”

French said that many workers appreciate the “freedom and flexibility” of being independent contractors. “Unfortunately, some state legislatures have imposed burdensome new regulatory regimes on these workers with predictably disastrous results. American businesses must be able to engage with these contractors without fear of frivolous litigation. These rules will allow them to do that and will support retailers’ efforts to spur job creation.”

The Department of Labor on Wednesday issued the final version of regulations that create a modern “economic reality” test to determine whether a worker is an employee covered by the Fair Labor Standards Act and its requirements for minimum wage and overtime or an independent contractor exempt from those requirements. Under the regulations, the determination will be based on two main factors – the nature and degree of the worker’s control over the work and the worker’s opportunity for profit or loss based on initiative or investment.

NRF has led retailers’ efforts to clarify the status of independent contractors. Among other actions, NRF last year filed two legal briefs asking courts to overturn a California worker classification law that narrowed the circumstances under which an individual can work as a contractor, including one case in federal court involving truck drivers and another in state court involving rideshare drivers.