Employee or Independent Contractor Classification Under the Fair Labor Standards Act
Summary
This final rule restores the multifactor economic reality test for determining whether a worker is an employee or independent contractor under the Fair Labor Standards Act. The rule rescinds the previous administration's simplified two-factor test and returns to a totality-of-the-circumstances analysis, considering six factors including opportunity for profit or loss, investment, permanence, and the degree of employer control.
Key Points
- 1Restores the totality-of-the-circumstances economic reality test with six factors
- 2No single factor is assigned predetermined weight or dispositive status
- 3Considers the worker's opportunity for profit or loss depending on managerial skill
- 4Evaluates the relative investments by the worker and the potential employer
- 5Affects classification for minimum wage and overtime protections under the FLSA
Impact Assessment
If you are a Small Business or gig economy platform, this means you must reassess worker classifications using a more stringent six-factor test, likely reclassifying some independent contractors as employees and triggering obligations for wages, benefits, and overtime pay.
National
Significant
Key Dates
January 10, 2024
March 11, 2024
Regulatory Connections
This summary is for informational purposes only. It may not capture all nuances of the regulation. Always refer to the official text for authoritative information.