FLSA Rules Changed for Independent Contractor Status March 11th 2024

On March 11, 2024, the 2021 Independent Contractor Rule ends, and the FLSA Rules Change, making it more challenging to classify individuals as contractors.

The official website and "final rule" information can be found at this website https://www.federalregister.gov/documents/2024/01/10/2024-00067/employee-or-independent-contractor-classification-under-the-fair-labor-standards-act

The Department of Labor's Application of the Economic Reality Test

(1) the extent to which the services in question are an integral part of the `employer[']s' business;

(2) the amount of the so-called `contractor's' investment in facilities and equipment;

(3) the nature and degree of control by the principal;

(4) opportunities for profit and loss; . . .

(5) the amount of initiative judgment or foresight required for the success of the claimed independent enterprise[;] and

[(6)] permanency of the relation.” 

The guidance cautioned that no single factor is controlling, and “ordinarily a definite decision as to whether one is an employee or an independent contractor under the [FLSA] cannot be made in the absence of evidence as to [the worker's] actual day-to-day working relationship with [their] principal. Clearly a written contract does not always reflect the true situation.” 

PS: The first federal lawsuit against this updated was filed on January 16. Stay tuned!