Effective March 11, 2024, the U.S. Department of Labor (DOL) rolled out a final rule that redefines how workers are classified under the Fair Labor Standards Act (FLSA).

This final rule introduces a six-factor test aimed at determining whether a worker should be classified as an employee or an independent contractor. These factors include:

1.        Opportunity for profit or loss based on managerial skill.

2.       Investments made by the worker and potential employer.

3.       Degree of permanence in the work relationship.

4.       Nature and degree of control.

5.       Whether the work performed is integral to the employer’s business.

6.       The worker’s skill and initiative.

The revised test seeks to evaluate the economic realities of a worker’s relationship with an employer, emphasizing the fact that independent contractors run their own businesses, while FLSA-covered employees are economically dependent on their employers.