The Department of Labor’s new independent contractor rule for worker classification under the Fair Labor Standards Act (FLSA) went into effect March 11, 2024, although it is subject to several legal challenges. This latest version of the ever-changing standard lists six non-weighted economic factors to consider when deciding whether a person is an independent contractor or an employee.
The new rule replaces a Trump Administration rule that provided clearer guidance to employers. The Biden Administration’s DOL claimed that the Trump-era regulations were based on an improper reading of the FLSA and unduly emphasized the control factor. The new rule is likely to confuse employers and increase the probability of incorrect classifications and the potential monetary liability that accompanies them.
Legal challenges to DOL’s new rule are pending in federal district courts in Georgia, Texas, Tennessee, and Louisiana. They variously allege that the rule violates the Administrative Procedure Act (APA) and the FLSA. CWC will report on further developments as they occur.
Members of the Center for Workplace Compliance (CWC), our affiliated nonprofit membership association, can read more here.