Are your workers properly classified?
On January 10, 2024, the Department of Labor published a final rule, effective March 11, 2024, revising the Department’s guidance on how to analyze who is an employee or independent contractor under the Fair Labor Standards Act (FLSA). This rule replaces the 2021 independent contractor rule issued under former President Trump and implements a six-factor test for worker classification that aligns with judicial precedent.
The Six-Factor Economic Reality Test
The six-factor “economic reality test” is used to determine whether a worker is an independent contractor or an employee. The goal of the test is to assess whether the worker is economically dependent on the employer for work or is instead in business for themselves. The six factors include:
- Opportunity for profit and loss
- Investments by the worker
- Degree of permanence of the relationship
- Nature and degree of control
- Whether the work performed is integral to the employer’s business
- Skills and initiative
This is a complex rule, and if you need guidance on this or any other employment-related issue, contact Leslie Even at Turke & Steil, LLP.