Department of Labor Announces Final Rule on Independent Contractors

The United States Department of Labor (DOL) announced a final rule on January 9 revising its interpretation of the Fair Labor Standards Act’s (FLSA) classification provision to determine whether a worker may be considered an independent contractor. The rule will require that workers be considered employees rather than contractors when they are “economically dependent” on a company. The final rule rescinds the 2021 Independent Contractor Rule and replaces it. It largely mirrors the agency’s October 2022 proposed rule, adopting a six-factor, “totality-of-the-circumstances” framework for analyzing worker-employer relationships.

The DOL will consider six factors when examining the relationship between a worker and a potential employer:

  • Worker’s opportunity for profit or loss.
  • Investments made by the worker and the employer.
  • Degree of permanence of the work relationship.
  • Nature and degree of control over performance of the work.
  • Extent to which the work performed is an integral part of the employer’s business.
  • Use of the worker’s skill and initiative.

The rule will be published in the Federal Register on January 10, and will take effect March 11. The Alliance filed comments on the proposed rule on December 13, 2022.

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