The U.S. Department of Labor (DOL) issued a highly anticipated new rule this week redefining which workers can be classified as “independent contractors” under the Fair Labor Standards Act (FLSA). The new rule, which will take effect March 11, restores the standard that existed prior to 2021, and requires companies to weigh a variety of economic factors together to determine whether a worker is an employee or an independent contractor.
Why it matters: This new rule could spark an increase in misclassification lawsuits and make it more difficult for businesses to hire independent contractors and gig workers. Employers who misclassify workers can be liable for unpaid overtime going back up to three years, double damages, and attorneys’ fees and costs. Employers who use independent contractors should consult with legal counsel to review whether workers are properly classified under the DOL’s new rule.
Go deeper: Read a full legal analysis from our friends at the Varnum law firm HERE.