On January 10, 2024, the U.S. Department of Labor announced substantial revisions to the Fair Labor Standards Act (FLSA) guidelines, effective March 11, 2024. The FLSA sets out key regulations like minimum wage, overtime pay eligibility, recordkeeping, and child labor standards. This revision redefines worker classification as employees or independent contractors, replacing the 2021 rule.
The 2024 FLSA Rule Change
This new rule introduces a detailed test, examining factors like profit or loss opportunities and the level of control over work. This change, favoring employee classification, suggests that employers shall review and potentially update their worker classification policies and agreements. It’s essential to remember that this revision does not impact other federal, state, or local worker classification laws.
Revised Test for Worker Status
The key factors of the revised test include:
Profit or Loss Opportunities: Evaluating how a worker's managerial skills can affect their profit or loss.
Investment Comparison: Considering investments by both the worker and the potential employer.
Relationship Permanence: Assessing the stability and duration of the work relationship.
Control Over Work: Examining the degree of control the employer has over the work.
Role in Business: Determining the significance of the worker's role to the employer's business.
Skill and Initiative: Measuring the worker's skills and initiative.
Implications for Businesses
Businesses should consider reviewing their workforce, especially those classified as independent contractors, to align with the new rule. This may involve adjustments in employment practices, contract terms, work conditions, and payment structures.
Action Steps for Compliance
Consider reassessing current contractor relationships to meet the new classification standards.
Update contracts and work policies as necessary.
Stay informed about legal interpretations and guidance on the rule.
Seeking Assistance? For assistance, GB and Partners Law Office has U.S. attorney partners experienced in this area. Contact us at info@gbplo.com for support and guidance.
The information provided in this article is for general informational purposes only and is not intended as legal advice. The contents of this article are based on the author's understanding of the Fair Labor Standards Act (FLSA) as of its publication date. Laws and regulations are subject to change and may vary by location and specific circumstances. Readers are advised to consult with a qualified legal professional for legal advice tailored to their particular situation. The author and publisher of this article disclaim any liability in connection with the use of this information.
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