Expansive independent contractor rule draws quick opposition

On January 9, 2024, the Department of Labor’s (DOL) Wage and Hour Division (WHD) issued its long-awaited regulation “Employee or Independent Contractor Classification Under the Fair Labor Standards Act.” The new rule will have a huge effect on the economy, particularly with respect to construction, trucking, health care, and the entire “gig economy,” which appears to be a target of the regulation.

Seven factors

According to the new rule, the determination of whether a worker is an employee or independent contractor focuses on whether the worker is either economically dependent on the employer for work or in business for themselves. The new rule uses seven factors to help make that determination. This reverses the 3-year-old rule that had focused on two factors—whether there was direct control over someone’s work and whether the worker had an opportunity for profit and loss, with the other factors reduced to secondary considerations.

With the new rule, all factors will be weighed equally under a totality of circumstances analysis, which, inevitably, creates ambiguity and uncertainty for all parties involved.

The economic factors of the new rule are: