U.S. Department of Labor Issues a Final Rule on the Determination of Independent Contractor Status
On January 10, 2024, to become effective March 11, 2024, the U.S. Department of Labor issued a final rule on the determination of independent contractor status under the Fair Labor Standards Act (FLSA).
The final rule broadens the circumstances under which workers may be considered employees as opposed to independent contractors under the FLSA. Six nonexhaustive factors are to be considered in determining whether an individual is an employee or independent contractor under the final rule:
(1) any opportunity for profit or loss a worker might have,
(2) the financial stake and nature of any resources a worker has invested in the work,
(3) the degree of permanence of the work relationship,
(4) the degree of control an employer has over the worker’s work,
(5) whether the work the worker does is essential to the employer’s business, and
(6) a factor regarding the worker’s skill and initiative.
None of the listed factors have a predetermined weight, and additional factors may also be relevant. Essentially, the U.S. Department of Labor is reverting to looking at the total circumstances of the relationship to make a determination whether an individual is to be considered an employee of independent contractor.