On January 9, 2024, The U.S. Department of Labor (DOL) released its final rule on worker classification under the Fair Labor Standards Act (FLSA). The 2024 rule, which takes effect on March 11, 2024, is largely in line with the version proposed by the DOL in 2022. It replaces the Trump administration’s simplified worker classification analysis and returns to the long-standing “totality of the circumstances” standard, but with a pro-employee spin.
Julie Su, Acting Secretary of Labor, reiterated that misclassifying employees is an important topic: “Misclassifying employees as independent contractors is a serious issue that deprives workers of basic rights and protections,” she said. “This rule will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly and that they receive the wages they’ve earned.”
Under the 2024 rule, the DOL reverts back to the six-factor test, with no one factor given more weight than another. The factors include:
- Any opportunity for profit or loss for a worker depending on managerial skill
- Financial commitments made by the worker and prospective employer
- Longevity of the working relationship
- Level of control an employer has over the worker’s performance
- Whether the work is integral to the employer’s business
- The worker’s skill and initiative
According to the DOL, the 2024 rule is meant to “reduce the risk that employees are misclassified as independent contractors while providing a consistent approach for businesses that engage with individuals who are in business for themselves.”
For more information, read the DOL’s news release and contact your HW&Co. advisor with any questions.
© 2024
Senior Manager
sue.bennett@hwco.cpa
