U.S. Department of Labor - Worker Classification/Independent Contractor Rule Finalized

January 12, 2024

Final Rule Scheduled to Take Effect March 11th.

Earlier this week, the Department of Labor finalized their pending Worker Classification Rules, which outlines factors employers must consider when determining whether or not their worker is a company employee, or may be classified as an independent contractor.

IAM had submitted earlier comments to the Department, requesting that a worker’s classification place significant and appropriate weight to an individual’s nature and control over their work, as well as their opportunity for profit or loss. As we explained in our comments, these two factors accurately reflect the business reality of today’s current work environment and provide the needed flexibility for both workers and companies to operate in an effective and efficient manner.

However, the final rule reverted back to an earlier set of six factors (referred to collectively as the “economic realities” test), providing equal weighting for each one when considering a worker’s status.

  • The worker’s opportunity for profit or loss
  • Investments by the worker and potential employer
  • The degree of permanence of the relationship
  • The nature and degree of the potential employer’s control over the work
  • The extent to which the work is “integral” to the potential employer’s business
  • The worker’s skill or initiative

IAM anticipates legal challenges to arise prior to the rule taking effect in March, and will keep members posted on any new developments in the interim. If you have questions or would like additional information, please reach out to Bryan Vickers with IAM's Government and Regulatory Affairs team bvickers@pacellp.com, (703) 403-2882.