DOL Issues Final Rule on Determinations for Independent Contractor and Employee Status

On January 10, 2024, the United States Department of Labor (DOL) issued a final rule that will become effective on March 11, 2024, revising the DOL’s guidance used to determine an individual’s status as an employee or an independent contractor under the Fair Labor Standards Act (FLSA). The rule relies on a multifactor “economic reality test” and totality of the circumstances analysis to determine an individual’s status. In sum, an individual will not be deemed an independent contractor if they are economically dependent on an employer for work as opposed to being in business for him or herself. The factors assessed will include, but will not always be limited, to the following:

  1. Opportunity for profit or loss depending on managerial skill
  2. Investments by the worker and the potential employer
  3. Degree of permanence of the work relationship
  4. Nature and degree of control
  5. Extent to which the work performed is an integral part of the potential employer’s business
  6. Skill and initiative

No factor or set of factors is predetermined to weigh more heavily than any other factor(s).

We will continue to monitor this and other related employment and labor law developments. For questions regarding how this will affect your business, please contact Lisa M. Scidurlo, Michael G. Tierce or the Stevens & Lee attorney with whom you regularly work.