DOL publishes final rule regarding independent contractor classification under FLSA

Recently, the U.S. Department of Labor (DOL) issued its final rule on employee or independent contractor classification under the Fair Labor Standards Act (FLSA). This new rule, effective March 11, 2024, closely follows the DOL’s 2022 proposed rule, rescinding and replacing the 2021 Independent Contractor Status Under the FLSA Rule (2021 IC Rule).

The 2021 IC Rule

The 2021 IC Rule, published on January 7, 2021, less than three weeks before President Joe Biden took office, departed from the economic realities test long used by courts and the DOL to determine whether a worker is an employee or independent contractor under the FLSA.

The 2021 IC Rule identified five factors—two “core factors” carrying greater weight in the analysis and three less probative, “noncore factors”—to guide the inquiry into determining a worker’s status. The two core factors consisted of the nature and degree of control over the work and the worker’s opportunity for profit or loss.

The noncore factors included the amount of skill required for the work, the degree of permanence of the working relationship between the worker and the potential employer, and whether the work was part of an integrated unit of production.

The new 2024 rule