Update: New Labor Law Decision

New Rules for Workers: Department of Labor Clarifies Independent Contractor Classification under FLSA

The U.S. Department of Labor’s Wage and Hour Division (WHD) has issued a new rule revising its analysis for determining whether a worker is classified as an employee or an independent contractor under the Fair Labor Standards Act (FLSA). This decision has significant implications for both workers and businesses, as it clarifies the criteria used to assess worker classification and potentially expands the pool of individuals eligible for FLSA protections.

What is the FLSA?

The FLSA is a federal law that establishes minimum wage, overtime pay, and recordkeeping requirements for most employees in the United States. However, independent contractors are not covered by the FLSA’s protections. Therefore, accurately classifying workers as employees or independent contractors is crucial to ensure compliance with labor laws.

What Changed with the New Rule?

The new rule, which will take effect on March 11, 2024, rescinds the Trump-era “Independent Contractor Rule” and reverts to a more worker-friendly approach based on the “economic realities “test. This test focuses on the economic dependence of the worker on the employer, considering factors such as:
Whether the worker is in business for themselves (e.g., has their own
equipment, sets their own rates)
The degree of control exercised by the employer over the worker’s work
(e.g., scheduling, supervision)
The worker’s opportunity for profit or loss
The permanence of the work relationship

Under the new rule, it is expected that more workers will be classified as employees and entitled to FLSA protections. This could include individuals working in the gig economy,

such as delivery drivers and online platform workers, who were more likely to be considered independent contractors under the previous rule.

Impact of the New Rule

The new rule is expected to have a significant impact on both workers and businesses. For workers, it could mean:
Receiving minimum wage and overtime pay
Eligibility for benefits like health insurance and paid time off

Greater job security and legal protections For businesses, the new rule may lead to:

Increased labor costs due to paying minimum wage and overtime More complex payroll and benefits administration
Potential legal challenges if workers are misclassified

What Businesses Should Do

Businesses should review their workforce and carefully assess the classification of their workers under the new rule. They should consult with legal counsel to ensure compliance with the FLSA and consider revising their worker classification practices if necessary.


The WHD’s new rule on employee or independent contractor classification is a significant change that could benefit many workers by expanding their access to FLSA protections. However, businesses need to be aware of the potential impact on their operations and take steps to ensure compliance with the new rule.

This is just a brief overview of the new rule. For more information, please visit the WHD website: https://www.dol.gov/agencies/whd/flsa/misclassification

Should you have any questions or concerns regarding whether or not someone is an employee or independent contractor, please call us at 212-882-1752 or send an email to info@piercekwok.com. We’d be happy to provide a free consultation.

Like this article?

Share on Facebook
Share on Twitter
Share on Linkdin
Share on Pinterest