The Labor Department has finalized a rule for determining whether a worker is an employee or an independent contractor under the FLSA. The new rule will take effect March 11, 2024.
The rule rescinds regulations issued during the Trump Administration and resurrects a controversial six-part economic reality test from the Obama Administration. The ultimate inquiry is the workers’ economic dependence—whether workers are, as a matter of economic reality, in business for themselves.
The final rule fleshes out the control factor, which considers the nature and degree of the employer’s control over the worker, by discussing scheduling, remote supervision, price setting, and the ability to work for others.
The final rule states that the relative investments made by a worker and a potential employer should be compared not only by dollar value but also by whether a worker’s investments suggest that the worker is operating independently. Costs imposed on a worker by a potential employer do not constitute an investment.