Effective March 8, 2021, the United States Department of Labor (“DOL”) will adopt a new rule to determine if an individual is an employee or an independent contractor under the Fair Labor Standards Act (“FLSA”).
The new five factor rule refines the “economic reality” test. Of the five factors, the first two are the most significant in determining whether an individual is an employee or an independent contractor. Although, each factor must be assessed independently, as well as in conjunction with the other factors, to determine the worker’s status.
The five factors of the new test are as follows:
- The nature and degree of the worker’s control over the work;
- The worker’s opportunity for profit and loss;
- The amount of skill required for the work;
- The degree of permanence of the working relationship between the worker and the potential employer; and
- Whether the work is part of an integrated unit of production.
To read this rule, click here.
Authors: Matthew John Markling and the McGown & Markling Team.
Note: This blog entry does not constitute – nor does it contain – legal advice. Legal jurisprudence is like the always-changing Midwestern weather. As a result, this single blog entry cannot substitute for consultation with a McGown & Markling attorney. If legal advice is needed with respect to a specific factual situation, please feel free to contact a McGown & Markling attorney.