DOL Issues Final Rule On Independent Contractor Classification

On January 9, the U.S. Department of Labor (DOL) issued its final rule (the Final Rule) for determining whether a worker is an employee or independent contractor for purposes of the Fair Labor Standards Act (the FLSA), replacing a rule adopted by the previous administration in 2021 (the 2021 Rule). The Final Rule is important to employers from both a cost and compliance perspective because it may result in more workers being classified as employees than under the 2021 Rule.¹ The Final Rule, which becomes effective March 11, sets forth a "totality-of-the-circumstances" test with six factors emphasizing economic dependence as key to the underlying determination, but with no one factor presumed to carry more weight than any other. The Final Rule's broader analysis is in contrast to the 2021 Rule, which set forth five "economic realities" factors with two "core factors" designated as having greater weight in the analysis. The factors set forth in the Final Rule are as