WFCA Advocates for Flooring Retailers Under New Independent Contractor Rule

The World Floor Covering Association (WFCA) continues to advocate for flooring retailers in an effort to address the new U.S. Department of Labor (DOL) ruling that determines the definition of independent contractor and employees—an issue hugely consequential to the thousands of flooring retailers who hire subcontractors for their installation jobs.

The DOL published a final rule on independent contractor classification on January 10, 2024, that went into effect on March 11, 2024. This rule updates the 2021 rule and replaces the Fair Labor Standards Act (FLSA) with an analysis that is more consistent with the Act's text and purpose

WFCA CEO Scott Humphrey and Jeff King, special counsel of Jones Walker, hosted a webinar on March 28 to discuss these advocacy updates and legal challenges facing businesses in the flooring industry.

WFCA lobbyists met with lawmakers in Washington DC to discuss issues that are negatively impacting membership and the industry as a whole.

The independent contractor rule changes based on the administration it’s in. Humphrey told Floor Trends & Installation that a conservative administration is okay with subcontract employees with independent contractors.

“Under a democratic administration, they would like everyone to be an employee partly because the issues of people not paying their taxes,” Humphrey said. Prior to 2021, each department had a different rule, which was inconsistent.

The WFCA has been working to change this ruling since 2020. The group has a call every week with their lobbying firm to address current issues and travel to DC at least four times a year to meet with those who will determine the votes.

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
The worker’s skill and initiative

WFCA submitted a 50-page comment, which was cited by the DOL 15 times in its final ruling. Humphrey said the group didn’t get everything they asked for, but still made a substantial change.

Here’s what the WFCA advocated:

Profit and loss only from “management skills” would include accepting or declining jobs, hiring helpers, buying supplies, etc.
Requiring “compliance with legal obligations,” not control
Investments can include tools and equipment that increase work or risk profit or loss, and vehicles
Recognize rely on repeat business and long-term clients if non-exclusive, can work for others
To be integral, must be necessary to principal business
Skills include technical skills that are used in a “business-like manner”
Not a scorecard or checklist
No one factor dispositive, rather “totality of the circumstances” and other factors

Current Issues

The new IC rule is just one topic the WFCA is working on. The team meets and works with congressional staff to review, revise and advise on drafts.

“We just recently did two proposed bills that have directly affected our industry dealing with some training opportunities in Mississippi and Georgia," King said. "They both asked us to write comments on their proposed legislations, which we gave detailed red-lined versions of what we had done. One of them resulted in them wanting to change one of their legislations when they realized it could have adverse tax implications on small businesses."

On the regulatory side, there were mandates for installers that the group deemed unnecessary.

“If you have anybody who is cutting any kind of stone, concrete, tile, they create silica dust, which is a crystalline silica,” King said. “When that is created, it can be very adverse to your health. What they want to do is have everybody who is exposed to any silica dust, when you’re meeting all your installers and any type of fabricator, they would have to wear monitors and special equipment and give full physicals on their lungs every six months.”

The team went through a substantial number of meetings to come to the conclusion that most people don’t cut continuously for eight hours a day. If they cut under four hours a day and do it outdoors with a wet saw or doing it indoors with a Hypervac, then they don’t have to do any of the regulations. This saved the industry a lot of costs.

King explains how they also meet with regulatory staff. An example is that the Environmental Protection Agency (EPA) created a regulation on formaldehyde. The regulation states that those who deal with a product that has formaldehyde in it and they fabricate anything out, it must be relabeled as such.

The group of advocates emphasized that a majority of flooring installers who use products such as plywood subfloor or engineered flooring will contain formaldehyde. They managed to get the EPA to say that is not considered a fabricator and you don't have to label it as such. The EPA didn’t realize the negative impact it would have in the flooring industry, so they changed it once the team brought it to their attention.

Workforce Development

A longstanding goal has been to expand training programs. The team helped Senator Oswalt out of Georgia rewrite tax credits, as opposed to a tax deduction, to reduce taxes dollar for dollar based upon 20% of whatever was paid for the equipment. The team is trying to expand that and make sure it includes both a deduction plus the credit.

“This could result in two things. It’ll help anybody who donates, but it’ll get the manufacturers looking at this as a godsend because they will be able to give materials for training programs and other associations that train people because it is such a tax benefit to them,” said King.

They’re rewriting that because people who don’t pay a corporate tax would be hurt by it, such as independent and subcontractors. Under Trump’s tax reform, he lowered the corporate tax to 22%, which is going to expire at the beginning of next year. The team is working very hard to have that extended to save people in the industry hundreds of thousands of dollars in taxes, according to King.

Earmarks

Another current topic of conversation is trying to register earmarks for training programs. Whether it’s through FCEF, CFI, etc., the team is going to D.C. to get training for installation and see if there’s funding that can be earmarked to help.

Labor Shortage

According to King, Congressman Tony Gonzales recognizes certain industries are dying from labor because they just don’t have enough workers.

“The HB1 program is a temporary program where workers can come into this country where you don’t have enough U.S. workers to fill the need. Congressman Gonzales wants to propose expanding the HB program for people to get a one-year work visa, then reapply after five years, and apply for a Permanent Resident Card,” King explained. “This is a step towards legitimate citizenship and immigration but also addresses the immediate need of workers to help sustain our country with productivity."

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