DOL Issues Final Rule Regarding Independent Contractor Classification

The U.S. Department of Labor (DOL) issued its Final Rule regarding the test for independent contractor classification. The Final Rule, which becomes effective March 11, 2024, largely mirrors the DOL's proposed rule announced in 2022 and sets forth a multi-factor "totality of the circumstances" economic realities framework for analyzing whether a worker is an employee or independent contractor under the Fair Labor Standards Act (FLSA).

The new rule is more restrictive than the now rescinded 2021 Independent Contractor Rule, which focused on two core factors – the nature and degree of control over the worker and the worker's opportunity for profit or loss – with other factors as secondary considerations. Under the new rule, no single factor or group of factors is assigned any predetermined weight, and the DOL has signaled its renewed interest in analyzing the worker's investment in the work and whether the service being performed by the worker is an integral part of