The U.S. Department of Labor announced Tuesday 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. It retains the multifactor, “totality-of-the-circumstances” framework for analyzing independent contractors’ status included in that proposal.

Under this framework, DOL will consider six nonexhaustive 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 will be published in the Federal Register on Wednesday, Jan. 10, and is slated to take effect March 11, officials said.

In a press call Monday, Acting Secretary of Labor Julie Su said the final rule would ensure a level playing field for workers, particularly vulnerable workers who are misclassified and lose out on minimum wage, overtime pay and other protections under the FLSA.

“These labor protections are a floor under which no one should be forced to live and work,” Su said. “In my role, I have traveled and talked to workers across the country who are working full time, year-round and still struggle to make ends meet because of misclassification. They sometimes work side by side with individuals who are properly classified, doing the same work.”

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