DOL Issues Final Independent Contractor Rule

On January 9, 2024, the Department of Labor (DOL) issued its Final Rule for analyzing whether a worker is considered an employee or an independent contractor under the Fair Labor Standards Act (FLSA). 

This Final Rule rescinds the DOL's prior independent contractor rule that was issued at the end of the Trump Administration (the “2021 IC Rule). 

The new Final Rule rescinds the 2021 IC Rule and restores the totality-of-the-circumstances analysis used previously. Under the Final Rule, six factors are considered. None of these factors have a predetermined weight. Instead, each factor will be considered against the totality of the entire activity. 

THE SIX FACTORS ARE. . .

1. Opportunity for profit or loss depending on managerial skill; 

2. Investments by the worker and the potential worker; 

3. The degree of permanence of the work relationship; 

4. The nature and degree of control; 

5. The extent to which the work performed is an integral part of the potential employer's business; and

6. The worker's skill and initiative. 

Employers should know that the new rule is likely to expand protections under the FLSA and limit the number of workers who will be considered independent contractors. Businesses that partner with independent contractors should review their classifications to ensure it complies with the Final Rule and ensure that any control exercised is necessary to comply with specific legal requirements.

This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client relationship. 

For more information on this and other topics, please contact Kevin via any of the channels listed below:

📧 kevin@kmckernan.com  | 📞 718-317-5007