On January 9, the U.S. Department of Labor announced a final rule revising its interpretation of the Fair Labor Standards Act’s classification provision to determine whether a worker may be considered an independent contractor. The final rule largely tracks the agency’s October 2022 proposed rule and it is expected that many independent contractors would be deemed as employees by the Department.

Under this framework, USDOL will consider six non-exhaustive factors when examining the relationship between a worker and a potential employer:

• Worker’s opportunity for profit or loss.
• Investments made by the worker and the employer.
• Degree of permanence of the work relationship.
• Nature and degree of control over performance of the work.
• Extent to which the work performed is an integral part of the employer’s business.
• Use of the worker’s skill and initiative.

The rule includes vague and undefined terms, like “reserved control” that will make it difficult for employers to determine whether the USDOL will decide that an independent contractor should have been classified as an employee. It also retains the multifactor, “totality-of-the-circumstances” framework for analyzing independent contractors’ status.

 The rule was published in the Federal Register on Wednesday, Jan. 10, and is slated to take effect March 11.