The new rule was released on January 10, 2024, and was effective March 11, 2024.
The rule aims to provide clarity and guidance on the classification of workers as independent contractors, ensuring fairness to both workers and employers. It establishes clear criteria for determining independent contractor status, focusing on the economic reality of the working relationship rather than solely relying on job titles and contractual agreements.
The rule considers several factors, including:
- Nature and degree of control over work.
- Opportunity for profit or loss.
- Level of skill required for the job.
- Degree of permanence of the working relationship.
- Investments by the worker and employer.
- Extent to which the work performed is an integral part of the employer’s business.
All factors are considered equally to determine the “totality of the circumstances.” In addition to these factors, the rule states that other factors may be relevant, such as whether the worker is in business for themselves, as opposed to being dependent on the potential employer for work.
If your business uses independent contractors now is the time to evaluate them to make sure they meet the definition of an independent contractor. Reach out to Hubric Resources for support in ensuring that you are in compliance with the new rule.
More information can also be found on the DOL website at: https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking