DOL Issues New Test For Employee/Independent Contractor Classification

The U.S. Department of Labor ("DOL") has published its new final rule regarding whether workers are properly classified as employees, who are subject to the overtime and minimum wage protections of the Fair Labor Standards Act ("FLSA"), or independent contractors, who are not. The DOL claims that its new rule provides greater consistency for employers that engage with individuals who are in business for themselves and harmonizes the analysis applied by the majority of courts. Business groups likely have a different perspective and may file suit to overturn the rule as they have with other agency rulemaking. While the new rule may be most relevant to gig economy employers like Uber and franchisors who fear being deemed to be joint employers of their franchisees' workers, it applies to all employers. Any company that classifies its workers as independent contractors in violation of this rule could be subject to investigation or fines by the DOL.