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Earlier this week, the U.S. Department of Labor submitted for publication the text of its final rule for determining when a worker is an employee or an independent contractor for purposes of federal wage and hour law. When the rule was proposed last October, the DOL said that the rule was designed to reveal whether workers are, as a matter of “economic reality,” “economically dependent” upon the employer or are in business for themselves. Permeating the proposed rule is the DOL’s apparent view that an independent contractor should be entrepreneurial in nature. The six factors that will be used to analyze employee or independent contractor status under the FLSA are: opportunity for profit or loss depending on managerial skill; Investments by the worker and the potential employer; Degree of permanence of the work relationship; Nature and degree of control; Extent to which the work performed is an integral part of the potential employer’s business; and Skill and initiative. The final rule provides detailed guidance regarding the application of each of these six factors. No factor or set of factors among this list of six has a predetermined weight, and additional factors may be relevant if such factors in some way indicate whether the worker is in business for themself (i.e., an independent contractor), as opposed to being economically dependent on the employer for work (i.e., an employee under the FLSA). The final rule will publish in the Federal Register on Wednesday January 10, 2024 and is effective March 11, 2024. The text of the pre-publication version of the final rule is available here and a series of FAQs the Labor Department released on the final rule are available here. – FCA and SWACCA
Earlier this week, the U.S. Department of Labor submitted for publication the text of its final rule for determining when a worker is an employee or an independent contractor for purposes of federal wage and hour law. When the rule was proposed last October, the DOL said that the rule was designed to reveal whether workers are, as a matter of “economic reality,” “economically dependent” upon the employer or are in business for themselves. Permeating the proposed rule is the DOL’s apparent view that an independent contractor should be entrepreneurial in nature.
The six factors that will be used to analyze employee or independent contractor status under the FLSA are:
The final rule provides detailed guidance regarding the application of each of these six factors. No factor or set of factors among this list of six has a predetermined weight, and additional factors may be relevant if such factors in some way indicate whether the worker is in business for themself (i.e., an independent contractor), as opposed to being economically dependent on the employer for work (i.e., an employee under the FLSA). The final rule will publish in the Federal Register on Wednesday January 10, 2024 and is effective March 11, 2024. The text of the pre-publication version of the final rule is available here and a series of FAQs the Labor Department released on the final rule are available here. – FCA and SWACCA