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 * US Department of Labor announces final rule on classifying workers as
   employees or independent contractors under the Fair Labor Standards Act




News Release


US DEPARTMENT OF LABOR ANNOUNCES FINAL RULE ON CLASSIFYING WORKERS AS EMPLOYEES
OR INDEPENDENT CONTRACTORS UNDER THE FAIR LABOR STANDARDS ACT

Rescinds 2021 independent contractor rule; replaces it with analysis consistent
with caselaw

WASHINGTON – The U.S. Department of Labor today announced a final rule to help
employers and workers better understand when a worker qualifies as an employee
and when they may be considered an independent contractor under the Fair Labor
Standards Act.

The rule provides guidance on proper classification and seeks to combat employee
misclassification, a serious problem that impacts workers’ rights to minimum
wage and overtime pay, facilitates wage theft, allows some employers to undercut
their law-abiding competition and hurts the economy at-large. 

“Misclassifying employees as independent contractors is a serious issue that
deprives workers of basic rights and protections,” explained Acting Secretary of
Labor Julie Su. “This rule will help protect workers, especially those facing
the greatest risk of exploitation, by making sure they are classified properly
and that they receive the wages they’ve earned.” 

The guidance provided by the final rule aligns with longstanding judicial
precedent on which employers have previously relied to determine a worker’s
status as either an employee or independent contractor. The new rule will
preserve essential worker rights and provide consistency for entities covered by
the Fair Labor Standards Act. 

The new “independent contractor” rule restores the multifactor analysis used by
courts for decades, ensuring that all relevant factors are analyzed to determine
whether a worker is an employee or an independent contractor. The rule addresses
six factors that guide the analysis of a worker’s relationship with an employer,
including any opportunity for profit or loss a worker might have; the financial
stake and nature of any resources a worker has invested in the work; the degree
of permanence of the work relationship; the degree of control an employer has
over the person’s work; whether the work the person does is essential to the
employer’s business; and a factor regarding the worker’s skill and initiative.

The rule separately rescinds the 2021 Independent Contractor Rule(link is
external) that the department believes is not consistent with the law and
longstanding judicial precedent. 

In crafting the new rule, the department’s Wage and Hour Division considered
feedback provided by stakeholders at forums in the summer of 2022 and during the
comment period after the proposal’s announcement in October 2022. The final rule
takes effect on March 11, 2024.

Agency
Wage and Hour Division
Date
January 9, 2024
Release Number
23-2369-NAT
Media Contact: Jake Andrejat
Phone Number
202-693-6139
Email
Andrejat.Jacob.G@dol.gov
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