The Dept. of Labor has finalized its new independent contractor rule. It will take effect March 11 and largely hews to the draft regs the agency proposed in Oct. 2022.
The rule includes six nonexhaustive factors officials will use to determine whether a worker should be classified as an employee or independent contractor under the Fair Labor Standards Act:
- Opportunity for profit or loss based on managerial skill.
- Investments by the worker and the potential employer.
- Degree of permanence of the relationship.
- Nature and degree of control.
- Extent to which the work performed is an integral part of the potential employer’s business.
- Skill and initiative.
No single factor is determinative; rather, the “totality of the circumstances” controls. Additional factors may be considered if they are relevant to the overall question of economic dependence.
A few notable changes from the initial proposal: The Dept. of Labor has clarified that actions taken by an employer to comply with the new rule are not necessarily indicative of an employment relationship. Similarly, costs borne unilaterally by workers are not indicative of independent contractor status.