DOL Issues Independent Contractor Final Rule

SHRM article on the Department of Labor Independent Contractor Final Rule, which goes into effect March 11, 2024.

Due to key changes made by the U.S. Department of Labor (DOL), businesses will soon find it harder to classify workers as independent contractors. The Biden administration officially rescinded a rule that made classifying workers as independent contractors easier under federal wage and hour rules. In its place, businesses will be forced to follow an outdated standard that will likely result in more workers being classified as employees.

1. New Rule Tilts Playing Field Against Businesses The new rule will reinstate a more complex analysis focusing on the “totality of the circumstances” to determine whether a worker is an employee or independent contractor.

2. The Totality Test Will Lead to More Workers Being Classified as Employees The rule that is about to be scrapped primarily focused on two “core factors”:

  • The extent of control exercised over key aspects of the work
    AND
  • The opportunity for profit or loss.

3. State Rules Still Apply Employers should note that the DOL’s test applies only to the Fair Labor Standards Act (FLSA), and many states have their tests that are applied to state-level wage and hour claims.

4. Businesses Will Face Increased Liability Risk Under federal wage and hour law, employees are entitled to certain benefits such as a minimum wage and overtime premiums. action lawsuits, large settlement demands, backpay, liquidated damages, interest, penalties, and attorneys’ fees can all quickly add up.

5. What Should You Do?

Call HRi for a discovery discussion regarding maintaining compliance at (410) 451-4202 or e-mail the HR Department at hr@hri-online.com.


Tim Schaffer
President

(443) 321-7777 | website | email
2127 Espey Court, Crofton, MD 21114

 


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