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Independent Contractor vs. Employee: How to Classify Workers

by | Feb 2, 2024 | Firm News |

On January 10th, 2024 the United States Department of Labor (“DOL”) put out a final rule that revised the classification criteria for independent contractors and employees under the Fair Labor Standards Act (“FLSA”). This new rule will go into effect on March 11th, 2024.

What are the new classification parameters?

Under the new FLSA rules, the employers must now conduct a test with six individual factors. These factors are:

  • Opportunity for profit/loss the worker may hold
  • Degree of financial stake the worker has invested into the employer
  • Permanence of work relationship between worker and employer
  • Degree and nature of control the employer holds over tasks
  • The integral nature of the worker’s tasks to the functioning of the employer’s business
  • Skill and initiative of the worker

What risk is involved with improperly classifying workers?

An employer who misclassifies their workers may be required to pay back wages, overtime, out-of-pocket product expenses, and may even be subject to pay liquidated damages (double damages under the FLSA). To ensure that your workers are appropriately classified under this new rule, you must consult with an expert employment attorney here at Thatcher Zavaro & Mani. Contact our office at 301-441-1400 to schedule a consultation appointment today. www.ThatcherLaw.com.

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