DOL eases path to use independent contractors, but MA employers should beware

Over the last decade, there have been countless cases in Massachusetts addressing individuals classified (or misclassified, as is often the argument) as independent contractors. In Massachusetts, misclassification of persons as independent contractors rather than employees often leads to class action wage and hour lawsuits. So, you may have seen that the U.S. Department of Labor (DOL) recently released a new proposed independent contractor rule and be wondering what it means for your Massachusetts business. Read on to learn more.

DOL’s proposed rule

Recently, the DOL released a proposed new rule used to determine whether workers are employees or independent contractors under the federal Fair Labor Standards Act (FLSA). The new test will make it easier for many employers to classify workers as independent contractors. The distinction between an employee and an independent contractor is important because most employees are entitled to minimum wage and overtime pay under the FLSA, but independent contractors are not.

The DOL’s proposed new rule adopts an “economic realities” test to determine whether a worker is economically dependent on a particular employer for work (and therefore classified as an employee) or whether the worker is “in business for” him or herself (and therefore classified as an independent contractor).