On January 10, 2024, the US Department of Labor announced an updated Final regarding guidance on independent contractors and employees. The rationale for the changes noted are that the rule “…will help to ensure that workers who are employees are paid the minimum wage and overtime due them, and that responsible employers that comply with the law are not placed at a competitive disadvantage when competing against employers that misclassify employees.”
According to the DOL, the new rule replaces the previous 2021 Independent Contractor Rule and incorporates judicial decisions. They state that the final revisions serve to:
- Look at various factors to assess the totality of the situation in determining whether the individual is an employee or an independent contractor under the FLSA.
- Explain the bullet above without assigning a predetermined weight to factors.
- Continue to use “economic reality factors,” including considering the:
- “Opportunity for profit or loss depending on managerial skill, investments by the worker and the potential employer”
- “Degree of permanence of the work relationship”
- “Nature and degree of control”
- “Extent to which the work performed is an integral part of to the…business”
- “The worker’s skill and initiative”
Southwestern HR Consulting (SWHRC) continues to monitor new and updated Human Resources related regulations. If you want to ensure HR compliance in your organization, contact SWHRC today!
Written by | Magdalena Vigil-Tullar
HR Consultant | MBA, SPHR, SHRM-SCP, CLRP
Phone: 505-270-7494 | Email: firstname.lastname@example.org