On January 10, 2024, the U.S. Department of Labor (DOL) published a final rule (Final Rule) that significantly changes the test for determining whether a worker is an independent contractor or an employee under the Standards Act. Fair Labor.

The Final Rule establishes a six-factor test focused on the economic realities of the relationship between a worker and a potential employer to determine independent contractor status and is scheduled to take effect on March 11, 2024. Since the Final Rule narrows the standard for determining independent contractor status, employers, especially those in certain industries, including hospitality and transportation, should pay close attention to the Final Rule and consider reviewing how they classify their workers.

Under the FLSA, a federal law that establishes minimum wage and overtime pay standards for most employers. If an employer is covered by the FLSA, it generally must provide minimum wage and overtime pay, protections to its employees, and comply with the law’s recordkeeping obligations. However, the FLSA requirements do not apply to independent contractors.