Department of Labor Announces Final Rule That Clarifies Independent Contractor Status

The rule, which clarifies the terms of independent contractor status, takes effect on March 8.

The Department of Labor announced a new final rule that clarifies the standard for employee versus independent contractor status under the Fair Labor Standards Act (FLSA) on January 6.

The test that determines who is categorized as an independent contractor under the FLSA has been refined to make it easier to identify which employees are covered by the Act. The rule will take effect on March 8.

“Streamlining and clarifying the test to identify independent contractors will reduce worker misclassification, reduce litigation, increase efficiency and increase job satisfaction and flexibility,” said Wage and Hour Division Administrator Cheryl Stanton. “The rule we announced today continues our work to simplify the compliance landscape for businesses and to improve conditions for workers. The real-life examples included in the rule provide even greater clarity for the workforce.”

The new final rule includes an explanation of the two core factors that determine whether a worker is economically dependent on someone else’s business or is in business for themselves. It also names three factors that may serve as additional guidances in the event that the previous two factors do not apply.

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About the Author

Nikki Johnson-Bolden is an Associate Content Editor for Occupational Health & Safety.

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