New independent contractor rule aims at paying more workers as employees
By: Mickell Summerhays
The expanded “economic realities” test increases the government’s presumption that a worker is an employee entitled to overtime and minimum wage protection.
On January 10, 2024, the U.S. Department of Labor (DOL) published a long-awaited rule changing its approach to determining whether a worker is an independent contractor or an employee under the Fair Labor Standards Act (FLSA). The new rule goes into effect March 11, 2024, and replaces a more employer-friendly standard enacted in 2021.
The new rule expands, from three factors to six, the government’s “economic realities” test, which seeks to determine whether independent contractors are truly in business for themselves or are actually employees who should be afforded full wage-and-hour and other FLSA protections.
The economic realities factors are non-exhaustive – i.e., a Wage and Hour Division auditor is free to consider additional factors – and, in contrast to the old rule, no single factor is more important than any other. The following list describes the six factors to clarify how the findings related to each would likely lead to a determination that an employee has been misclassified as an independent contractor:
- The worker has little opportunity for profit or loss, depending on the worker’s managerial skill.
- The company exercises a high degree of employer control over the worker, including setting the worker’s schedule and supervising the worker.
- The employer has made a greater investment than the worker in equipping the worker to perform their job function...
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#DOL #federal #independentcontractors #employee #Fairlaborstandardsact #flsa #azlaw #Constructionadvisor
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