Monday, January 29, 2024
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Federal Compliance Update
The U.S. Department of Labor (DOL) has published a final rule that will change the test for determining whether a worker is an employee or independent contractor under the Fair Labor Standards Act (FLSA). The final rule takes effect March 11, 2024. Here are some key points to know about the new test.
The new test
The DOL uses an "economic realities" test to determine whether workers are considered employees and therefore covered by the FLSA and entitled to minimum wage, overtime, and other wage and hour protections. Effective March 11, 2024, the test will:
- Return to a totality-of-the-circumstances economic reality test, where no single factor or group of factors is assigned any predetermined weight; and
- Consider six factors (instead of five), including the investments made by the worker and the potential employer.
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