The Department of Labor recently published a final rule that alters the test used in determining whether a worker is an employee or independent contractor based on the Fair Labor Standards Act (FLSA). It is slated to go into effect on March 11, 2024.
This final rule will replace what the DOL issued in 2021, going back to an economic test that reflects the totality of the circumstances. No pre-determined weight is applied to a group of factors or single factor. It also considers six factors, adding the investments made by the potential employer and worker into the equation.
The final rule offers an additional analysis of the control factor, including an extensive discussion of price-setting, supervision, scheduling, and the option to work for anyone else. It also goes back to the long-standing consideration of whether the work being performed is integral to the employee’s business, rather than whether it is exclusively part of an “integrated production unit.”
The DOL provided additional context to certain factors, including initiative and exclusivity in relation to skills, and a provision addressing whether an employer’s unexercised but reserved rights to control a worker have been rescinded and are relevant.
Review additional details here.
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.
