The Biden Administration released a new rule on how to classify “independent contractors” which narrows the definition and restricts its application. The Department of Labor’s final rule sets forth an analysis for determining whether a worker is classified as an employee or independent contractor under the Fair Labor Standards Act. To that end, a six-factor test that considers: (1) opportunity for profit or loss depending on managerial skill; (2) investments by the worker and the potential employer; (3) degree of permanence of the work relationship; (4) nature and degree of control; (5) extent to which the work performed is an integral part of the potential employer's business; and (6) skill and initiative. [NOTE: the new rule does not adopt the “ABC” test that some states have used. Also, additional factors may be relevant if they bear on whether the worker is economically dependent on the potential employer for work -- which seems like a given for nearly everyone in the workforce].
The new rule will rescind the 2021 “Independent Contractor Rule” which sort to clarify and expand reasonable criteria given the changing nature of the workforce particularly during the COVID-19 shutdowns. The Biden Administration rule will become effective March 11, 2024; barring any likely injunctions while legal challenges are decided.
For details on the new rule, see: Federal Register: Employee or Independent Contractor Classification Under the Fair Labor Standards Act