KNOW YOUR RIGHTS
The Independent Contractor Rule
WHAT ’ S NEXT ?
The US Department of Labor ’ s ( DOL ) final rule revising the standard for determining whether a worker is an employee or independent contractor under the Fair Labor Standards Act ( FLSA ) took effect on March 11 , 2024 . However , the rule faces an uncertain future due to several legal challenges that threaten to disrupt its implementation .
THE FINAL RULE
The final rule , published in the Federal Register on January 10 , 2024 , formally rescinds the DOL ’ s 2021 regulation and instead applies a six-factor “ economic realities ” test used by courts to assess independent contractor status . No single factor is given greater weight , and the test examines the totality of the circumstances .
LAWSUITS CHALLENGE THE RULE
The DOL withdrew the 2021 rule , issued at the end of the Trump administration , in May 2021 . Industry groups sued over the withdrawal , and in 2022 , a federal court held the withdrawal was unlawful . After the 2024 final rule was published , the business groups asked the appeals court to lift the stay and allow them to file an amended complaint , which they did on March 5 .
Separately , a trucking company and independent professionals like freelance writers and editors have filed lawsuits asserting the rule will harm their businesses and ability to work independently . The legal claims state the DOL exceeded its authority and that Congress did not empower the DOL to issue legislative rules defining the employment relationship under the FLSA . Plaintiffs seek injunctions barring enforcement of the 2024 rule .
CONGRESSIONAL EFFORTS UNDERWAY
In addition to lawsuits , Republicans in Congress introduced resolutions under the Congressional Review Act ( CRA ) to overturn the rule . The CRA allows Congress to rescind agency regulations through passage of a joint resolution . If the resolutions pass and are signed by the President , the rule cannot take effect or continue to be enforced .
The new DOL independent contractor rule is currently in effect , but its future remains uncertain given the pending legal challenges and CRA resolutions . Employers should consult counsel about complying with the evolving requirements for independent contractors . +
BY : TREY BRADLEY COMMERCIAL LINES ADVISOR ., JGS INSURANCE , A BALDWIN RISK PARTNER
Trey Bradley , a former fighter jet mechanic in the U . S . Navy , transitioned his dedication from military service to environmental stewardship . Over the past 7 years , he immersed himself in construction insurance , ensuring major American companies have the coverage essential for infrastructure projects . Trey ' s tenacity and problem-solving prowess have established him as a trusted advisor in corporate America . With a relentless drive , he remains committed to safeguarding the nation ' s future , providing certainty and security to those shaping its landscape .
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