On January 10, 2024, The Department of Labor published its final rulemaking altering the criteria for determining worker status as an independent contractor or employee under the Fair Labor Standard Act (FLSA). The final rule applies a multifactor test, where six different factors are considered holistically and could be determinative of a worker’s classification. This is a shift from the 2021 rule which identified two “core” factors that guided worker classification determinations: the nature and degree of the worker’s control over the work; and the worker’s opportunity for profit or loss. The final rule will go into effect on March 11, 2024.
“We’re disappointed DOL has finalized this rulemaking despite repeated requests from independent contractors, small businesses, and the regulated community to continue classification under the 2021 rule’s methodology,” said Josh Ulman, spokesman for the Partnership to Protect Workplace Opportunity. “The new multifactor test will just make it more difficult for workers to be classified as independent contractors.”
“The DOL is taking autonomy away from workers who prefer the flexibility and independence of independent contractor work arrangements. The majority of independent contractors including women, older Americans, and entrepreneurs would rather work independently than as traditional employees because it allows them to work around home conflicts, health issues, and other jobs. Reclassifying these workers would take away valuable employment opportunities.”
“This rulemaking will lead to a decline in employment. It will reduce opportunities for independent contractors, limit access to affordable project-based labor, and put small businesses reliant on contractors out of business.”