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In the final year of the Biden Administration, the U.S. Department of Labor (DOL) published its final rule for determining whether a worker is an employee or independent contractor under the federal Fair Labor Standards Act (FLSA).  

This is important to employers and workers because employees are subject to the FLSA (including its minimum wage, overtime, and recordkeeping requirements), while independent contractors are not. The new DOL rule rescinds and replaces a prior rule, issued in January 2021 during the Trump Administration, seen as more favorable to employers.

The new rule returns to the analysis followed by the DOL prior to the Trump Administration rule. That analysis centers on whether a worker is an employee or independent contractor under an “economic reality” test. According to the DOL, “economic dependence is the ultimate inquiry, meaning that a worker is an independent contractor as opposed to an employee under the FLSA if the worker is, as a matter of economic reality, in business for themself.”

The final rule faces multiple court challenges that may delay or even overturn the new rule’s approach to determining whether a worker is properly classified as an employee or an independent contractor.
 

Theodore P. Stein
410-576-4229 • tstein@gfrlaw.com