Department of Labor Finalizes Definition of Independent Contractor Status

The U.S Department of Labor announced a final rule today clarifying the standards for independent contractors under the Fair Labor Standards Act (FLSA). This rule is intended to mitigate worker misclassification by detailing the qualifications for an independent contractor.

Under this new rule, independent contractors will continue to use the “economic reality” test to determine whether or not they are truly reliant on themselves for business, or if they are economically dependent on an employer for work.

Additionally, the rule identifies two “core factors” to aid the determination of an independent contractor: the nature and degree over control of the work, and the worker’s opportunity for profit or loss based on initiative and/or investment.

To read the final rule, click here.