DOL Issues Final Rule Clarifying Employee Versus Independent Contractor Status Under FLSA
Miller & Martin PLLC Alerts | January 13, 2021
On January 6, 2021, the U.S. Department of Labor announced a final rule clarifying the standard for employees versus independent contractor status under the FLSA.
Taken directly from the Department of Labor’s announcement --
“The Final Rule (which you can read in the hyperlink) includes the following clarifications:
- Reaffirms an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (FLSA employee).
- Identifies and explains two “core factors” that are most probative to the question of whether a worker is economically dependent on someone else’s business or is in business for him or herself:
- The nature and degree of control over the work.
- The worker’s opportunity for profit or loss based on initiative and/or investment.
- Identifies three other factors that may serve as additional guideposts in the analysis, particularly when the two core factors do not point to the same classification. The factors are:
- The amount of skill required for the work.
- The degree of permanence of the working relationship between the worker and the potential employer.
- Whether the work is part of an integrated unit of production.
- The actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible.
- Provides six fact-specific examples applying the factors.
The rule will take effect 60 days after publication in the Federal Register, on March 8, 2021.”