Breaking news! The US Department of Labor today released details of its long-awaited final rule addressing when employers can classify workers as independent contractors under federal labor law.

The rule takes effect March 11, 2024 and rescinds the 2021 independent contractor rule that the department found to be inconsistent with the law and judicial precedent. The DOL’s final rule establishes the following six-factor (non-exhaustive) test:

  1. A worker’s opportunity for profit or loss;
  2. Investments made by the worker and the potential employer;
  3. The degree of permanence of the work relationship;
  4. The degree of control an employer has over the work; and
  5. The use of a worker’s skill and initiative; and
  6. The extent to which work performed is integral to the employer’s business.

According to the DOL, the proposed rule is designed to reveal whether workers are, as a matter of “economic reality,” actually “economically dependent” on the employer or are in business for themselves.

Employers must of course also keep in mind state and local laws governing independent contractor relationships, many of which impose different, often stricter, classification tests when determining a worker’s status, and requirements for independent contractor agreements.

For more details, the DOL press release and a link to the final rule, see here:
US Department of Labor announces final rule on classifying workers as employees or independent contractors under the Fair Labor Standards Act | U.S. Department of Labor