• Investments . The proposed rule said that an independent contractor must invest as much as their employer to maintain their status as an IC . The final rule loosens that up , stating that the Department of Labor will not compare the investments on a dollar-for-dollar basis . The Department will instead review relative investments to determine whether the worker is making investments that demonstrate their independence . For example , leasing a vehicle will constitute a significant investment and justify the classification as an IC .
• CDL Drivers . The final rule recognizes that a driver with a commercial driver ’ s license ( CDL ) has a specialized skill set that weighs toward independent contractor status .
Despite the movement toward CLDA on these fronts , the final rule puts in place a six-pronged economic realities test to determine whether an individual is an employee or an independent contractor . Unfortunately , the final rule gives the DOL complete discretion on enforcing the six economic realities test , where no single factor is necessarily dispositive . Still , it will depend upon the facts and circumstances of a particular relationship . The six factors are outlined below :
1 . The worker ’ s opportunity for a profit or loss depends on managerial skill . This factor considers whether the individual has an opportunity for profit or loss based on managerial skill that affects the individual ’ s economic success or failure in performing the work . Fortunately , the final rule clarifies it is the individual ’ s opportunity for profit or loss versus the individual ’ s actual performance .
2 . Investments made by the individual and the employer . Investments made by individuals must be capital or entrepreneurial to indicate independent contractor status . The final rule states that the individuals ’ investments should be evaluated against the employer ’ s investments but no longer contemplates a dollar-for-dollar comparison as envisioned in the proposed rule .
3 . Degree of performance of the work relationship . The final rule suggests that the permanency factor weighs in favor of the individual being an employee when the work relationship is indefinite , continuous or exclusive of work for other employers . The final rule does not give any guidance for how the Department of Labor will evaluate the work relationship .
4 . Nature and degree of the business control over the individual . The final rule contemplates facts that determine control over an individual , such as setting the individual ’ s schedule , supervising the individual ’ s performance , setting the individual ’ s price or rates , or limiting the ability of the individual to work for another employer . Fortunately , the final rule dropped the provision in the proposed rule that stated that compliance with other federal , state , local or tribal laws and regulations constituted control over the individual . So , only employers adding to those laws and regulations will constitute control . Unfortunately , this means employers imposing requirements based on customers ’ requests will constitute control .
5 . The extent to which the work performed is an integral part of the employer ’ s business . The final rule contemplates that if the work performed by an individual is critical , necessary , or central to the employer ’ s principal business , then that leans in favor of employee status .
winter 2024 I customized logistics & delivery Magazine 9