The Department of Labor published a final rule that changes the test used to determine if a worker is an independent contractor or employee based on the Fair Labor Standards Act (FLSA). It goes into effect on March 11, 2024.
This final rule will take the place of the final rule issued by the DOL in 2021, returning to an economic test that reflects the totality of the circumstances with no pre-determined weight being applied to a single factor or group of factors. It also considers six factors, adding the investments made by the potential employer and worker into the equation.
The final rule provides an additional analysis of the factor related to control, including a more in-depth discussion of scheduling, price-setting, supervision, and the option to work for others. It also returns to the long-standing consideration of if the work being performed is integral to the business of the employee, instead of whether it is exclusively part of an “integrated production unit.”
Additional context to certain factors is also provided, including exclusivity and initiative as it relates to skills, and a provision addressing the relevance of an employer’s unexercised but reserved rights to control a worker has been rescinded.
This article is informational and does not constitute legal or financial advice. Consult with an employment lawyer or accountant for additional clarification on how these changes impact your company.