Department of Labor Rescinds Final Rules on Worker Classification
The U.S. Department of Labor (“DOL”) withdrew guidance it previously announced concerning Employers being allowed to offer some benefits to Independent Contractors without running into Employer classification issues. The rule was set to go into effect in March. It would have adopted a new standard concerning classification of Independent Contractor under the Fair Labor Standards Act (“FLSA”).
As a consequence of the DOL’s decision to withdraw this proposed rule, Employers should takeaway that classification of employees under the FLSA is still governed by the prior “economic dependence” factors, which include:
The nature and degree of the potential employer’s control;
The permanency of the worker’s relationship with a potential employer;
The amount of worker’s investment in facilities, equipment or helpers;
The amount of skill, initiative, judgement, or foresight required for the worker’s services;
The worker’s opportunities for profit or loss; and
The extent of integration of the worker’s services into the potential employer’s business.
These factors are not viewed in a vacuum; rather, the totality of the circumstances surrounding the activity establishes the worker’s classification as either employee or Independent Contractor for FLSA purposes.
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