The U.S. Department of Labor has announced a final rule, effective March 11, 2024, revising the Department’s guidance on how to analyze who is an employee or independent contractor under the Fair Labor Standards Act (FLSA). The final rule rescinds the Independent Contractor Status Under the Fair Labor Standards Act rule (2021 IC Rule) that was published on January 7, 2021, and replaces it with a six-factor analysis:
- Worker’s opportunity for profit or loss;
- Investments made by the worker and the employer;
- Degree of permanence of the work relationship;
- Nature and degree of control over performance of the work;
- Extent to which the work performed is an integral part of the employer’s business; and
- Use of the worker’s skill and initiative.
Instead of using the “core factors” set forth in the 2021 IC Rule, the final rule returns to a totality-of-the-circumstances analysis of the economic reality test in which the factors do not have a predetermined weight and are considered in view of the economic reality of the whole activity.
You can review the final rule here.