The U.S. Department of Labor (DOL) has issued a field assistance bulletin instructing the Wage and Hour Division’s staff to stop applying a rule issued last year describing how to determine whether a worker is an independent contractor or an employee under the federal Fair Labor Standards Act (FLSA). The 2024 rule (which we reported on) is still in effect and can be relied upon in private litigation, but the federal government will rely on it only in “individual cases deemed appropriate” while it reviews the regulation. The DOL has also reinstated a previously withdrawn opinion letter which looked more favorably on “gig workers” as independent contractors. There are six factors the courts and the federal government have consistently used in evaluating whether someone is an employee under the FLSA: (1) the nature and degree of control; (2) opportunity for profit and loss; (3) investment in facilities and equipment; (4) special skills; (5) permanency of the relationship; and (6) whether the work performed is integral to the business.
Tips: The six factors remain the same under either standard, however the analysis of those factors may change depending on the regulatory guidance. Vigilant will keep members informed of any significant developments and will update our Legal Guide, Independent Contractor or Employee, if the regulation is rescinded. In the meantime, contact your Vigilant Law Group attorney for assistance.
