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DOL rule set to broaden liability for employers

March 1, 2024

A U.S. Department of Labor rule that takes effect this month may result in more contract workers being classified as employees, potentially requiring employers to provide benefits and insurance coverage such as workers compensation and possibly exposing them to employment-related lawsuits.

The Employee or Independent Contractor Classification Under the Fair Labor Standards Act rule, which was finalized Jan. 10 and rescinds a Trump administration rule, covers employment classification under the FLSA, but employers worry it might have broader influence.

Government officials say the rule provides a clearer analysis for employers to use to determine a worker’s employment status. It re-adopts an enhanced economic realities test for worker classification that was in effect under an Obama administration rule.

The new rule contains a six-factor test to guide employers in determining a worker’s employment status under the FLSA (see box), whereas the Trump administration rule had a two-factor test.


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