9am - 5pm ( Mon - Fri )
1856 N Nob Hill Road #212 Plantation, FL 33322-6548

WHD Releases Independent Contractor Final Rule

February 28, 2024by Barbara Flynn0

On Jan. 9, the Department of Labor’s Wage and Hour Division (WHD) released its highly anticipated final rule on worker classification, “Employee or Independent Contractor Classification Under the Fair Labor Standards Act.”

The final rule, officially published on Jan. 10, will become effective 60 days after it is published on March 11 in the Federal Register.

This rule clarifies how workers are classified, either as employees or independent contractors, for purposes of the Fair Labor Standards Act’s (FLSA’s) wage and hour protections. Because the FLSA does not define “independent contractor,” courts and the WHD rely on the “economic reality test” to determine worker status. The new test mandates a review of each of the following factors to determine worker status:

  • Opportunity for profit or loss depending on managerial skill.
  • Investments by the worker and the employer.
  • Degree of permanence of the work relationship.
  • Nature and degree of control.
  • The extent to which the work performed is an integral part of the employer’s business.
  • Skill and initiative.

In a press statement about the final rule, Emily M. Dickens, SHRM chief of staff and head of public affairs, stated: “This pivotal ruling underscores the importance of clear and consistent regulations, fostering diverse business relationships essential for the demands of the modern economy. HR plays a vital role in ensuring proper worker classification. However, the ongoing shifts in regulatory guidance impose compliance burdens and legal uncertainties on HR professionals and business executives.”

In 2022, SHRM submitted a public comment advocating for the WHD to maintain the 2021 worker classification test that provided core factors to consider and gave workers and American businesses clarity and certainty. SHRM’s advocacy on this issue was noted within the WHD’s final rule, with SHRM’s substantive questions mentioned throughout.

Barbara Flynn

Leave a Reply

Your email address will not be published. Required fields are marked *

CALL USContact Information
People First, Inc.
Where everything begins and ends with people
1856 North Nob Hill Road #212
Plantation, FL 33322
Organically grow the holistic world view of disruptive innovation via empowerment.
OUR LOCATIONSWhere to find us?
GET IN TOUCHAvantage Social links
Taking seamless key performance indicators offline to maximise the long tail.

Copyright by People First INC. All rights reserved. 2022

2022 Copyright by People First Inc.  All rights reserved.