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U.S. DOL’s Final Rule on Independent Contractors Set to Take Effect March 11 Despite Litigation: What You Should Know

The U.S. Department of Labor (DOL) published its Final Rule on Employee or Independent Contractor Classification on Jan. 10, 2024, aimed at guiding employers in determining worker classification under the Fair Labor Standards Act (FLSA). The rule, scheduled to take effect on March 11, 2024, rescinds the previous administration's 2021 rule and adopts an analysis more aligned with longstanding judicial precedent. However, it faces legal challenges in Texas, Georgia, Tennessee, and Louisiana, as well as opposition in Congress. The final rule utilizes a totality-of-the-circumstances analysis, considering six factors with no predetermined weight given to any single factor. These factors include opportunity for profit or loss, nature and degree of control, degree of permanence of the work relationship, integration of work into the employer's business, specialized skill and initiative, and investment of capital or entrepreneurial effort by the worker compared to the employer. The rule also allows for the consideration of additional factors that illustrate economic dependence between the worker and potential employer. Click here for article.

  • Final Rule Details:

  • Published by the DOL on Jan. 10, 2024, the Final Rule provides guidance on worker classification under the FLSA.

  • It rescinds the previous administration's 2021 rule and adopts an analysis closer to judicial precedent.

  • Scheduled to take effect on March 11, 2024.

  • Legal Challenges:

  • Facing lawsuits in Texas, Georgia, Tennessee, and Louisiana, as well as opposition in Congress.

  • If challenges succeed, the 2021 rule could remain in effect.

  • Analysis Factors:

  • Utilizes a totality-of-the-circumstances analysis, considering six factors with no predetermined weight given to any single factor.

  • Core factors include opportunity for profit or loss, nature and degree of control, and others, with additional factors possible to consider economic dependence.

  • Potential Impact:

  • Regardless of the final rule, independent contractor misclassification remains a significant compliance concern for businesses.


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