A Final Ruling on Independent Contractors

On January 10, the Department of Labor (DOL) released Final Rule: Employee or Independent Contractor Classification Under the Fair Labor Standards Act. Administrator Jessica Looman summarizes the changes as:

  • Returning to the multifactor, totality-of-the-circumstances analysis to assess whether a worker is an employee or an independent contractor under the FLSA.  
  • Explaining that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors.   
  • Using the longstanding interpretation of the economic reality factors. These factors include opportunity for profit or loss depending on managerial skill, investments by the worker and the potential employer, the degree of permanence of the work relationship, the nature and degree of control, the extent to which the work performed is an integral part of the potential employer’s business, and the worker’s skill and initiative.

Business Takeaway: No substantive surprises to this final rule or the fact that it rescinds the 2021 rule, but it is noteworthy that it is now final. If you still have questions on the new rule, the rescinding of the old rule, and/or how the rule affects your business, consider starting with the Wage and Hour Division’s own FAQs. It is quite clear (between this and state developments that this topic will stick around for a while).