Global Public Policy

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January 8, 2021

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The U.S. Department of Labor (DOL) has finalized its rule on how to classify workers as either employees or independent contractors under the Fair Labor Standards Act (FLSA).

The rule is intended to clarify the “economic reality” test for determining whether a particular worker is an employee or an independent contractor. The rule will take effect on March 6, 2021, unless additional action is taken.

The test is substantially the same as what DOL proposed in the September Notice of Proposed Rulemaking. Under the rule, the agency will consider the “economic reality” of the relationship by looking two core factors: the nature and degree of the worker’s control over the work and the worker’s opportunity for profit or loss based on initiative or investment.

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