The Department of Labor (DOL) published the final rule addressing independent contractor classifications this month. The rule is set take effect March 11, 2024.
The final rule replaces a prior January 2021 rule put forward by the Trump administration and then sidelined by the Biden Administration. In the past two years, the topic has been challenged in courts and kept employers guessing on the proper way to classify workers.
The new rule closely mirrors the DOL’s position prior to the Trump administration’s rule. It adopts a “totality-of-circumstances” standard when evaluating whether a worker is an employee of a business under the Fair Labor Standards Act (FLSA). The DOL identifies six factors that should be evaluated when determining worker classification:
- The extent to which the work performed is an integral part of the employer’s business
- Whether the worker’s managerial skills affect his or her opportunity for profit and loss
- The worker’s and employer’s investment in facilities and equipment
- The worker’s skill and initiative
- The permanence of the relationship
- The nature and degree of control by the employer
A coalition of business groups has already challenged the final rule in an effort to block the DOL’s latest move. Bukaty Companies will continue to monitor the issue. If your business has questions on employment classifications, contact Bukaty’s HR Consulting professionals.