On Jan. 9, the U.S. Department of Labor (DOL) issued its final rule, “Employee or Independent Contractor Classification under the Fair Labor Standards Act.” 29 CR 780, 788, 795.
The rule takes effect on March 11 and replaces the 2021 Independent Contractor Rule which the DOL believed ignored case law and the DOL’s position on independent contractor status. The new rule does not have any effect on other state or federal laws that have different standards for classifying independent contractors. It only applies to the Fair Labor Standards Act (FLSA).
Under the new rule, an individual is not an independent contractor if they are, as a matter of economic reality, economically dependent on an employer for work. The final rule applies six factors to analyze employee or independent contractor status under the FLSA:
(1) opportunity for profit or loss depending on managerial skill;
(2) investments by the worker and the potential employer;
(3) degree of permanence of the work relationship;
(4) nature and degree of control;
(5) extent to which the work performed is an integral part of the potential employer’s business; and
(6) skill and initiative.
No factor or set of factors among these six has a predetermined weight, and additional factors may be relevant if such factors in some way indicate whether the worker is in business for themselves, and therefore an independent contractor, as opposed to being economically dependent on the employer for work, thus an employee under the FLSA.
The final rule is 330 pages and contains detailed guidance regarding how to apply the factors. Employers need to act now to determine whether any individuals you currently have classified as an independent contractor will still be properly classified under the new rule.
It is highly likely that many individuals currently classified as independent contractors, will be classified as employees under the new rule, which is the point of the rule change.
This requires a complicated analysis, so seeking the advice of counsel may prove valuable to ensure your business is complaint with the final rule.
Add a comment
Subscribe
RSSTopics
- Employment Liability
- Labor Law
- Department of Labor (DOL)
- Fair Labor Standards Act (FLSA)
- Employment Agreement
- At Will Employment
- Wage & Hour
- Employment Discrimination
- Minimum Wage
- National Labor Relations Act
- Equal Employment Opportunity Commission (EEOC)
- Human Resources
- Noncompete Agreements
- Civil Rights
- National Labor Relations Board (NLRB)
- Contract Employees
- COVID-19
- Americans With Disabilities Act (ADA)
- National Labor Relations Board
- Coronavirus
- Family Medical Leave Act (FMLA)
- Tax Law
- Whistleblower Protection Act
- Regulatory Law
- Paid Medical Leave Act (PMLA)
- Federal Trade Commission
- OSHA Issues
- Title VII
- Civil Litigation
- Settlements
- Retaliation
- Sick Leave
- Unemployment Benefits
- Workplace Harassment
- Contracts
- Transgender Issues
- Accommodations
- First Amendment
- Hostile Work Environment
- Business Risk Management
- Public Education
- ERISA
- Workers' Compensation
- Cannabis
- Department of Justice
- Medicare Issues
- LGBTQ
- Class Actions
- Sexual Harassment
- Garnishments
- Social Media
- Retail Liability
- RICO
- Emergency Information
- Uniformed Services Employment and Reemployment Rights Act (USERRA)
- Department of Education (DOE)
- Title IX
- Medical Marijuana
- Right to Work
- Health Insurance Portability and Accountability Act (HIPAA)
- Diversity
- Union Organizing & Relations
Recent Updates
- Federal Court Throws out DOL’s Attempt to Rewrite White Collar Overtime Rules
- Civil Rights Litigation Filed by Christian Employers Gets New Life Following Federal Appellate Court Ruling
- Michigan Supreme Court Clarifies Minimum Wage Decision
- Judge Strikes Down Federal Ban on Non-compete Agreements
- Michigan Employers Can Legally Resist Union Organizing Efforts
- Michigan Supreme Court Decision Reinstates Previous Versions of Wage Laws
- Union Power in Michigan: Is it Real or Imagined?
- Employers Should act Now to Address Rising DOL Salary Thresholds for Exempt Employees
- Is This the end of the Employee Non-Compete Clause?
- Tax Considerations When Settling an Employment Claim 2.0