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ARTICLE · 17 JANUARY 2024

DOL Announces Final Rule Affecting Independent Contractor Classification Under The FLSA

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On 10 January 2024, the US Department of Labor (DOL) published a final rule (Final Rule) that significantly changes the test for determining whether a worker is an independent contractor or employee under the Fair Labor Standards Act.

United StatesEmployment and HR
Erinn Rigney
Erinn Rigney

Introduction

On 10January 2024, the US Department of Labor (DOL) published a final rule (Final Rule) that significantly changes the test for determining whether a worker is an independent contractor or employee under the Fair Labor Standards Act (FLSA). In doing so, the DOL rescinds a Trump-era rule from 2021, which went by the same name (economic reality test) but had functionally eased the standard for employers to classify workers as independent contractors.

The Final Rule sets forth a six-factor test focused on the economic realities of the relationship between a worker and a potential employer to determine independent contractor status and is scheduled to go into effect on 11 March 2024. As the Final Rule restricts the standard for determining independent contractor status, employers, especially those in certain industries, including hospitality and transportation, should pay particular attention to the Final Rule and consider revisiting the way

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