By the Michigan Chamber of Commerce
The U.S. Department of Labor’s (DOL) final rule on employee or independent contractor classification under the Fair Labor Standards Act (FLSA) went into effect on March 11.
Why it matters: The new rule may result in more workers, including those desiring independent contractor status, being classified as employees – subjecting them to minimum wage, overtime pay and record keeping standards. The change may lead to greater ambiguity and variability in determining worker status, potentially increasing litigation and providing the DOL with more enforcement discretion.
Zooming in: The DOL’s new rule uses multiple factors to see if an employment relationship exists under the FLSA. According to the DOL, “All factors should be considered as no single factor determines a worker’s status, and no one factor or combination of factors are more important than the other factors. Instead, the totality of the circumstances of the working relationship should be considered.”
Companies using independent contractors are advised to consult with legal counsel to determine how to proceed.
Go deeper: Check out the DOL’s fact sheet or review the compliance article from our friends at the Foster Swift law firm.