Under the Fair Labor Standards Act, or FLSA, workers have the right to minimum wage and overtime pay when
they have an employment relationship with an employer and the law covers their work. It is up to employers
to figure out whether a worker counts as an employee under the FLSA. Misclassification happens when an employer treats someone as an independent contractor even though they legally qualify as an employee. This is a serious issue because workers who are misclassified may miss out on minimum wage, overtime pay, and other protections and benefits they are entitled to by law.
To help address this problem, the Wage and Hour Division released a final rule on January 10, 2024, which took
effect on March 11, 2024. This rule updates the guidance on how to determine whether a worker is an employee or an independent contractor under the FLSA. The guidance is now included in regulations at 29 CFR Part 795. Both employers and workers can use these regulations, along with other resources, to better understand how a worker’s status should be classified. The new rule also replaces the Independent Contractor Status Under the Fair Labor Standards Act rule that was issued in January 2021.
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Our amazing W2 benefits include:
401K Retirement Savings
Medical Insurance
Dental & Vision Insurance
Health Savings Account
Basic Life/AD&D Plan
Employee Assistance Program
Accident Insurance
Paid Sick Leave
FMLA
Holiday Pay
Employee Referral Bonus
Overtime if applicable
This agency began in 2011 to be of service to former nuclear weapons program workers, a group of amazing people who gave so much to our country through their tireless efforts at numerous sites across the country. Trusted Ally was founded on the belief that if we took outstanding care of our employees, our employees would be ready and resourced to provide the best care possible for our clients.
Trusted Ally is a premier employer in the home healthcare industry.
A: Yes, and those agencies are at risk of lawsuits by consumer groups for denying overtime and benefits.
A: It updates the Department of Labor’s guidance on how to tell whether someone is an employee or an
independent contractor under the FLSA. It replaces the 2021 rule, better reflects long‑standing court
decisions, and is meant to reduce worker misclassification while giving businesses more consistent
guidance.
A: March 11, 2024.
A: The Department believes the 2021 rule did not match the purpose of the FLSA or long‑standing court
decisions. It narrowed the economic reality test too much by putting too much weight on certain factors
and limiting what could be considered, which caused confusion and disruption.
A: It gives clearer and more detailed guidance that lines up with court rulings. The rule applies across
industries and is published in the Code of Federal Regulations so it is easier to find and use.
A: No. It uses a multi‑factor economic reality test and looks at all the facts together. No single factor decides
the outcome.
A: No. This rule only applies to the FLSA. Other federal, state, or local laws may use different tests, and
businesses must follow whichever standard gives workers the most protection.
A: It uses a six‑factor economic reality test that focuses on whether the worker is economically dependent
on the employer. No factor has more weight than the others, and additional factors can be considered if
they are relevant.
A: No. If a worker meets the definition of an employee under the FLSA, they cannot give up rights like
minimum wage or overtime pay.
A: Both focus on economic dependence, use multiple factors, and make clear that no single factor controls.
They also explain that worker status does not depend on how much money someone makes or whether
they have income from other sources.
A: This rule looks at all the circumstances together instead of relying on “core factors.” It uses six specific
factors, separates the investment factor, expands how control is evaluated, brings back consideration of
whether the work is integral to the business, adds more explanation to certain factors, and gives more
weight to control the employer has even if it is not actively used.
A: After reviewing about 55,400 public comments, the Department made changes, especially around control
and investment. For example, it clarified that actions taken just to comply with the law do not count as
control, and that costs imposed by the employer are not considered the worker’s investments.
A: No. The importance of each factor depends on the situation. The rule does not rank them.
A: It looks at whether a worker’s business decisions affect their profits or losses. This can include
negotiating pay, choosing which jobs to take and when, marketing services, hiring others, or buying or
renting equipment. Simply working more hours usually does not count as managerial skill.
A: It focuses on whether the worker’s investments show they are running an independent business. These
investments are compared to the employer’s overall investments. Routine job costs or expenses required
by the employer tend to point toward employee status.
A: Ongoing, open‑ended, or exclusive relationships suggest employee status. Short‑term, project‑based,
or non‑exclusive relationships suggest independent contractor status. Seasonal work by itself does not
decide the issue.
A: The rule looks at how much control the employer has over the work and the economic terms of the job.
This includes scheduling, supervision, limits on outside work, technology used to monitor performance,
discipline, setting pay rates or prices, and marketing. Requirements that exist only to follow the law do
not count as control.
A: If the work performed is central or critical to the company’s business, that points toward employee status.
If the work is not central to the business, it may point toward independent contractor status.
A: Having skills alone is not enough. The key question is whether the worker uses those skills with
business‑like initiative, which suggests independent contractor status, or relies on the employer for
training and work, which suggests employee status.
A: They matter when they help show whether the worker is truly running an independent business or is
economically dependent on the employer.
A: No. All the factors are considered together. No single factor, or combination of factors, automatically
determines the outcome.
A: For questions about the rule itself, contact the Wage and Hour Division’s Division of Regulations,
Legislation, and Interpretation at (202) 693‑0406. For questions about a specific situation, contact the
nearest Wage and Hour Division District Office using the Department of Labor’s local office listing.