Category: FLSA

  • Federal Judge Vacates Overtime Final Rule

    Federal Judge Vacates Overtime Final Rule

    by CUPA-HR | November 15, 2024

    On November 15, a federal judge in the Eastern District Court of Texas ruled to strike down the Biden administration’s Fair Labor Standards Act (FLSA) overtime final rule. The ruling strikes down all components of the rule, meaning both the July and January salary thresholds are no longer in effect, and the triennial automatic updates will not take place. The decision applies to all covered employers and employees under the FLSA nationwide.

    The Eastern District Court of Texas held a hearing on the business groups’ lawsuits challenging the overtime regulations on November 8. During the hearing, the judge suggested that it would be problematic if DOL’s salary basis replaced the duties test established under the FLSA regulations. He also noted that the Biden administration’s regulations were projected to have a larger number of workers impacted by the salary threshold increase than the Trump administration’s 2019 rule. The judge did not rule from the bench, but his remarks showed skepticism about the Biden administration’s rule.

    Background

    As a reminder, the final rule implemented a two-phase approach to increasing the minimum salary threshold under the FLSA overtime regulations. The first increase took effect on July 1, increasing the minimum salary threshold from the current level of $684 per week ($35,568 per year) to $844 per week ($43,888 per year). The second increase was set to take effect on January 1, 2025, and it would have increased the minimum salary threshold again to $1,128 per week ($58,656 per year). The final rule also adopted automatic updates to the minimum salary threshold that would occur every three years.

    Soon after the final rule was published, several lawsuits were filed challenging the final rule. The suit claimed that the salary threshold that was supposed to go into effect on January 1, 2025, was so high it would result in more than 4 million individuals being denied exempt status, even though these individuals could be reasonably classified as exempt based on their duties, and in doing so, the rule violated both the statutory language of the FLSA and prior court decisions. The suits also challenged the automatic updates. The Eastern District Court of Texas granted a preliminary injunction for public employers in Texas prior to the July 1 effective date, stopping the rule from taking effect for those employers only. For private employers in Texas and all other employers in the country, the rule went into effect on July 1, and the January 1 effective date was still in play.

    Looking Ahead

    With the decision, the salary threshold set in the 2019 regulations ($35,568 per year or $683 per week) will be the salary threshold employers should adhere to. Whether President-elect Trump decides to increase the minimum salary threshold during his second term remains to be seen, but there will be no effort from his incoming administration to appeal the decision in favor of the Biden administration’s threshold. CUPA-HR will continue to keep members apprised of any updates related to the FLSA overtime regulations.



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  • DOL Issues Report on Coercive Contractual Provisions

    DOL Issues Report on Coercive Contractual Provisions

    by CUPA-HR | October 22, 2024

    On October 17, the Department of Labor’s (DOL) Office of the Solicitor (SOL) issued a Special Enforcement Report on “coercive contractual provisions.” The report lists several provisions they have seen included in employment contracts that the department believes “may discourage workers from exercising their rights under worker protection laws.” The report demonstrates recent actions taken by SOL to combat such provisions, but it does not include new enforcement actions against employers that use these provisions.

    In the report, SOL claims the provisions discussed are coercive, violate the law and have significant impacts on the most vulnerable workers. The report details seven types of contractual provisions they find especially concerning:

    1. Contractual provisions requiring workers to waive statutory protections, including those requiring workers to waive their rights to bring claims and recover damages under the Fair Labor Standards Act
    2. Contractual provisions that purport to require employees to agree that they are independent contractors
    3. Indemnification-type provisions and related counterclaims purporting to shift liability for legal violations to workers or other entities
    4. “Loser pays” provisions attempting to require employees to pay the employer’s attorney’s fees and costs if the employees do not prevail in litigation or arbitration
    5. “Stay or pay” provisions, including some training repayment assistance provisions, that purport to require workers to pay damages to their employer for leaving a contract early
    6. Confidentiality, non-disclosure and non-disparagement provisions
    7. Company policies that purport to require workers to report safety concerns to their employer before contacting any government agencies

    The report emphasizes that the Department of Labor is “not bound by private contracts or arbitration agreements between workers and employers” and thus “has a unique role to play in fighting the use of these ‘fine print’ or ‘coercive’ contractual provisions.” It provides examples of cases where the courts have found such agreements unenforceable or where DOL has pursued an injunction in federal court seeking an order blocking one or more contract provisions.

    Importantly, the report is largely a restatement of current law and, for the most part, does not outline new enforcement actions against employers for using these provisions. Instead, the report outlines the work SOL has done recently to fight against the coercive contractual provisions, including cases and amicus briefs filed against employers using such business practices.

    CUPA-HR will continue to monitor for additional resources from the Department of Labor that may impact contractual labor provisions.



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  • HR and the Courts — August 2024 – CUPA-HR

    HR and the Courts — August 2024 – CUPA-HR

    by CUPA-HR | August 14, 2024

    Each month, CUPA-HR General Counsel Ira Shepard provides an overview of several labor and employment law cases and regulatory actions with implications for the higher ed workplace. Here’s the latest from Ira.

    Student-Athletes and NCAA Propose a $2.8 Billion Settlement in Antitrust and Name, Image and Likeness Case

    Attorneys representing student-athletes have filed for court approval of a $2.8 billion settlement reached with the NCAA and the Power Five conferences. Bloomberg reports that the student-athletes were pursuing a $4.5 billion claim.

    Under the proposed settlement, a men’s football or basketball player would receive roughly $135,000 and a female basketball player would receive roughly $35,000. Athletes in other Division I sports, including football and basketball players in non-Power Five conferences, would also recover under the proposed settlement, although the terms of that recovery are not yet clear.

    Also under the proposed settlement, Division I schools will be able to provide student-athletes with direct payment up to a cap of 22% of the Power Five schools’ average athletic revenue per year. The payment pool will be more than $20 million per school in the 2025-26 academic year and will grow from there. The Power Five includes the Big Ten, Big 12, Atlantic Coast Conference, Southeastern Conference and Pac-12. (The Pac-12 lost its autonomy status for 2024-25 after 10 of 12 of its members departed for other conferences.) The proposed settlement was filed in the U.S. District Court for the Northern District of California (In Re College Athlete NIL Litigation (N.D. Cal., 4:20-cv-03919, 7/26/24)).

    It is reported that the multibillion-dollar settlement would be paid out over 10 years. A preliminary approval hearing will take place in September to be followed by a comment period from class members. If approval is reached it will spare the NCAA and the Power Five from a trial scheduled to take place in January, 2025.

    Employee Status of Student-Athletes Under the FLSA Still Undecided as Court Rejects NCAA’s Appeal

    The 3rd U.S. Circuit Court of Appeals (covering Delaware, New Jersey, Pennsylvania and the Virgin Islands) rejected the appeal of the NCAA contesting the trial court decision that college athletes are entitled to a trial to decide whether they are employees under the FLSA.

    The appeals court remanded the case back to the trial judge for more analysis on the applicable standard to be used in determining whether a student-athlete is an employee. The decision allows the college athletes to continue to pursue their claims, which allege that the NCAA and colleges are joint employers (Johnson V. NCAA (3rd Cir. No. 22-01223, 7/11/24)).

    The decision contrasts with the former holdings of the 7th U.S. Circuit Court of Appeals and the 9th Circuit, which rejected claims that student-athletes were employees. In remanding the case back for further analysis, the 3rd Circuit left room for the court to hold that some college athletes maintain their amateur, non-employee status while others are employees subject to the minimum wage requirements of the FLSA.

    The decision also rejected the term “student-athlete,” commenting that the term is an “NCAA marketing invention” designed to “conjure up the nobility of amateurism,” assert “the precedence of scholarship over athletics,” and “obfuscate the nature of the legal relationship at the heart of a growing commercial enterprise.” The decision stated that college athletes “cannot be barred as a matter of law from asserting FLSA claims simply by virtue of the revered tradition of amateurism.” Finally, the court remanded the case to the trial judge to use common-law factors, such as level of control and presence of payments, to determine the employee status of college athletes.

    Unionization Petitions Filed With NLRB Increase by 30% in 2024 — Decertification Petitions Increase by 12%

    Petitions filed with the National Labor Relations Board (NLRB) to both certify and decertify union representation are up dramatically so far this year.

    The increase in certification petitions is partially attributed to the NLRB’s decision in the Cemex decision. That decision requires employers, in response to a certification petition, to either voluntarily recognize the union or file an RM, which is used by employers to dispute that the union has majority status. The increase in activity also comes after the NLRB altered its administrative procedures to shorten the time between petition filing and the election.

    The NLRB also reports that its regional offices have conducted more representation elections so far in 2024 than in the entire 2023 fiscal year. Finally, the NLRB reports that unions have won 79% of union-filed petitions and 70% of employer-filed petitions.

    EEOC Signals Second Attempt to Require Employers to Report Pay Data by Race, Sex and Job Category

    The Equal Employment Opportunity Commission has indicated in its July regulatory playbook that it intends to make another attempt to require that employers annually report pay data by race, sex and job category. Its first attempt to do so was canceled by court intervention in 2016 during the Obama administration.

    The EEOC indicated it will use the Administrative Procedure Act (APA) as opposed to the Paperwork Reduction Act (PRA) to issue the new regulations. Under the APA, advance notice, including a comment period, is required. Also under the APA, an individual or organization has the private right of action to block the regulation.

    The recent Supreme Court decision in the Chevron case may make such APA challenges easier to manage for employers and employer organizations seeking to challenge the new attempt to collect pay data. In the Chevron case, the Supreme Court abandoned the rule of the presumption of legitimacy of federal agency decisions.

    Court Concludes NLRB Failed to Explain Why It Rejected Employer Objections in Union Election  

    The U.S. Court of Appeals for the District of Columbia Circuit concluded that the NLRB failed to coherently explain its rejection of employer election objections when the NLRB certified a union in a one-vote victory in a mail ballot election.

    The D.C. Circuit court concluded that the NLRB used different legal tests without explanation when it rejected an employer’s objections to the mail ballot election (GHG Mgmt LLC V. NLRB (DC Cir. No, 22-01312, 7/9/24)).

    The court ruled in a unanimous, three-judge decision that the NLRB failed to adequately explain its rejection of employer objections and remanded the case back to the NLRB for determination over which test it used to reject the employer’s objections. The court stated it can only rule on whether the NLRB’s decision was correct if it knows which test the NLRB used in coming to its decision. This case is another criticism of the NLRB’s handling of mail-in ballot elections used during and after the COVID-19 pandemic.

    Federal Judge Temporarily Rejects Texas AG’s Attempt to Block EEOC Guidance on LGBTQ+ Employees

    A federal district trial judge has temporarily rejected the Texas attorney general’s attempt to block current EEOC guidance that covers LGBTQ+ employees. The guidance protects employees’ right to choose pronouns and bathrooms consistent with their gender identity.

    The federal judge dismissed the case, holding that the Texas attorney general must file a new case and not rely on the past decision in which the federal judge vacated similar EEOC regulations protecting LGBTQ+ employees (State of Texas V. EEOC (N.D. Tex. No. 2-21-cv-00194, 7/17/24)).

    The judge ruled that his prior decision in favor of the Texas attorney general vacating prior EEOC LGBTQ+ regulations can be used as a predicate for a new case. Nonetheless, the Texas attorney general must file a new case seeking new injunctive relief. The federal judge explained that his prior decision addressed the EEOC’s 2021 guidance alone and a new case must be filed to adjudicate the issues involved in the new EEOC guidance.



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  • DOL Issues Guidance on AI in the Workplace – CUPA-HR

    DOL Issues Guidance on AI in the Workplace – CUPA-HR

    by CUPA-HR | May 8, 2024

    On April 29, the Department of Labor Wage and Hour Division (WHD) issued a Field Assistance Bulletin on “Artificial Intelligence and Automated Systems in the Workplace Under the Fair Labor Standards Act and Other Federal Labor Standards.” The bulletin provides guidance on the applicability of the FLSA and other federal labor standards as they relate to employers’ increased use of artificial intelligence and automated systems in the workplace.

    Background

    In October 2023, President Biden released an Executive Order on the “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence” and directed agencies across the federal government to take action to address the increased use of AI in all areas of life. With respect to AI in the workplace, the order directed the U.S. Secretary of Labor to “issue guidance to make clear that employers that deploy AI to monitor or augment employees’ work must continue to comply with protections to ensure that workers are compensated for their hours worked, as defined under the Fair Labor Standards Act (…) and other legal requirements.” The Field Assistance Bulletin is the first response from the DOL to the Executive Order’s directive, though additional guidance may be provided in the future.

    Summary of Guidance

    The bulletin discusses existing employer obligations to comply with and avoid penalties under relevant federal labor laws. It also clarifies that the use of AI and other technologies does not absolve employers of their responsibilities to comply with such laws. CUPA-HR’s government relations team has summarized the key points of the guidance below.

    AI and the FLSA

    The guidance highlights employers’ obligations to pay employees at least the federal minimum wage for all hours worked and at a rate of at least one and one-half times their regular rate of pay for every hour worked in excess of 40 in a single workweek. As such, WHD recognizes that employers have implemented AI and other automated systems to comply with these requirements, including implementing systems to help track work time, monitor break time, assign tasks to available workers, and monitor work locations. Additionally, WHD provides examples of AI and other technologies employers use to help calculate wages owed under the FLSA.

    WHD also recognizes that AI has the potential to undercount hours worked or miscalculate wage rates owed to employees. Regardless of the use of AI, WHD states in its guidance that “employers are responsible for ensuring that they are paying employees for all hours worked” under the FLSA and that “employers are responsible for ensuring that the use of AI or other technologies to calculate and determine workers’ wage rates does not cause workers to be paid in violation of” the FLSA and other applicable federal wage standards. As such, WHD suggests that employers exercise human oversight over the technologies to ensure they are not violating the FLSA.

    AI and the Family and Medical Leave Act

    Similar to WHD’s discussion of employers’ obligations to adhere to the requirements of the FLSA, the bulletin provides guidance on employers’ responsibilities to adhere to the requirements of providing Family and Medical Leave Act leave when using AI and other automated systems. WHD once again recognizes that some employers use AI and other tools to process leave requests, determine whether an employee has provided proper certification that supports the need for FMLA leave, or track the use of FMLA leave. As a result, WHD states that employers should oversee the use of AI or automated systems used to implement FMLA leave “to avoid the risk of widespread violations of FMLA rights when eligibility, certification, and anti-retaliation and anti-interference requirements are not complied with.”

    AI and Nursing Employee Protections

    WHD also provides guidance for employers’ use of AI as it relates to nursing employees’ rights to reasonable break time and space to express breast milk while at work, as protected under the FLSA and the Providing Urgent Maternal Protections for Nursing Mothers Act (PUMP Act). The bulletin states that, though employers may use AI to track employee work hours, set work schedules, and manage break time requests, any instance in which automated systems “limit the length, frequency, or timing of a nursing employee’s breaks to pump would violate the FLSA’s reasonable break time requirement.” The guidance also states that systems that score productivity and/or penalize workers for failing to meet productivity standards due to pump breaks would violate the FLSA. Finally, they clarify that automated systems that require nursing employees to work additional hours to make up for time spent during pump breaks or that reduce the hours scheduled in the future for workers because they took pump breaks would be considered “unlawful retaliation” under the FLSA. WHD therefore provides that “employers are responsible for ensuring that AI or other automated systems do not impose adverse actions on employees for exercising their rights to pump at work.”

    AI and the Employee Polygraph Protection Act

    The bulletin provides an overview of the Employee Polygraph Protection Act (EPPA) and most private employers’ prohibition from using lie detector tests on employees or for pre-employment screenings. In light of this law, WHD recognizes that AI technologies have been developed to “use eye measurements, voice analysis, micro-expressions, or other body movements to suggest if someone is lying or detect deception.” As such, WHD reaffirms that EPPA prohibits covered private employers from using AI technology as a lie detector test.

    AI and Prohibited Retaliation

    Finally, the bulletin covers protections against retaliatory conduct provided under the FLSA and other laws administered by WHD to employees who have filed complaints about potential violations of their rights. As a result of these protections, WHD states that “the use of AI and other technologies by employers to take adverse action against workers for engaging in protected activities under one or more laws enforced by WHD constitutes unlawful retaliation.” Additionally, WHD clarifies that the use of AI to surveil the workforce for protected activity and to take adverse actions could violate anti-retaliation protections under the FLSA and other laws. As such, WHD reminds employers in the guidance that they are responsible for compliance with anti-retaliation provisions regardless of whether they incorporate AI technology into their business practices.

    CUPA-HR will continue to monitor for additional guidance from federal agencies as it relates to the use of AI in the workplace.



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  • Senators Introduce Bill to Implement 32-Hour Workweek – CUPA-HR

    Senators Introduce Bill to Implement 32-Hour Workweek – CUPA-HR

    by CUPA-HR | April 3, 2024

    On March 14, Senator Bernie Sanders (I-VT) and Senator Laphonza Butler (D-CA) introduced the Thirty-Two-Hour Workweek Act, which would amend the Fair Labor Standards Act to reduce the standard workweek from 40 hours to 32 hours, while also providing that workers do not lose pay as a result of the reduced hours. A nearly identical bill was introduced in the House earlier this Congress.

    According to the Senate version of the bill, the FLSA would be amended to reduce the standard workweek from 40 hours to 32 hours by requiring overtime payment for any work done in excess of 32 hours in a given week. The bill includes a new requirement to provide overtime pay at the standard rate of one-and-a-half times the regular rate for any workday that is longer than eight hours but shorter than 12 hours, and it requires employers to pay an overtime rate of double the regular rate for any workday longer than 12 hours. The bill also stipulates that employers subject to the shortened workweek requirements may not reduce the total workweek compensation or any other benefit of an employee due to the employee being brought into the purview of the legislation. The 32-hour workweek would be phased in over a four-year period.

    The same day the bill text was introduced, the Senate Health, Education, Labor, and Pensions (HELP) Committee held a hearing on the need for a 32-hour workweek. Senator Sanders serves as the chairperson of the committee and led the Democrats’ arguments for shortening the workweek without reducing pay. He argued that new technology has increased the productivity of American workers, therefore decreasing the need for a 40-hour workweek as was enacted in the FLSA over 80 years ago. Republicans, on the other hand, argued that shortening the workweek without decreasing pay would hurt small businesses and would result in increased prices for goods and services and more automated jobs. They argued against a law mandating the 32-hour workweek and preferred flexibility for employers to choose to make that change if appropriate for their business operations.

    Given the partisan divide shown during the hearing, the bill is unlikely to move in the Senate anytime soon. Even if the bill passed out of the HELP Committee, it appears unlikely that it will garner the 60 votes necessary to bypass the filibuster if brought to the floor for a vote. The House version of the bill faces a similar fate, as the House Republicans currently have the majority. With the upcoming election in November, it will be interesting to see if power shifts in favor of Democrats in either chamber, which will likely be the only way the bill could pass in the House or Senate.

    CUPA-HR will keep members apprised of any updates as it relates to this legislation and future policy related to a shortened workweek.



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  • Ten Higher Ed HR Stories That Defined 2023 – CUPA-HR

    Ten Higher Ed HR Stories That Defined 2023 – CUPA-HR

    by Julie Burrell | January 17, 2024

    Last year brought major changes to the higher education landscape. Turnover reached a peak, prompting more attention than ever to retention and recruitment, while looming policy changes in overtime pay and Title IX regulations further complicated long-term planning. And, though it may feel like unprecedented change is the new normal, timeless HR topics like onboarding and compensation strategy also captured readers’ attention in 2023.

    We’ve rounded up the CUPA-HR articles, resources and research that defined 2023 and will continue to shape your 2024. These are the most-viewed stories on our website as well as some resources you may have missed.

    Top Stories

    CUPA-HR members were understandably concerned about the impact of two issues — the retention crisis and the potential shake-up to overtime pay rules — on their campuses.

    1. The Higher Ed Employee Retention Crisis — And What to Do About It

    Key Takeaway: Turnover in higher ed reached a peak last year — the highest level since we started tracking it in 2017 — so it’s no surprise that talent management and recruitment was top of mind. This article marshals a wealth of insights from our members and the CUPA-HR research team to aid HR pros, including a blueprint for employee recognition, as well as strategies for rethinking compensation and flexible work.

    1. The CUPA-HR 2023 Higher Education Employee Retention Survey

    Key Takeaway: The data provided here help explain the record-high turnover. The report also digs into the factors that most impact retention, offering a model for understanding higher ed retention. Analyzing data from 4,782 higher ed employees — administrators, professionals and non-exempt staff, with faculty excluded — from 529 institutions, the survey found that more than half (56%) of employees are at least somewhat likely to search for a new job in the coming year. (Looking for an overview of report findings? Check out our press release.)

    1. Overtime and Title IX Final Rules Targeted for Early 2024 Release in Fall Regulatory Agenda

    Key Takeaway: Last year, the Department of Labor announced that they would target April 2024 for the release of a final rule to update the Fair Labor Standards Act’s overtime pay regulations. The rule seeks to substantially increase the minimum salary threshold required for white-collar professionals to maintain exempt status. To stay abreast of any updates, don’t forget to register for our Washington Update webinars and visit our FLSA overtime resources page.

    Relationships and Well-Being

    The demands on HR pros are at an all-time high. Last year, our members sought ways to care for themselves, their team and their campuses. Two of the most popular resources of 2023 addressed mental health and resolving interpersonal conflict.

    1. Managing Stress and Self-Care: “No” Is a Complete Sentence

    Key Takeaway: In this highly rated recorded webinar, Jennifer Parker, professional development and training manager of the Colorado Community College system, gives practical tools for minimizing stress and leads participants in creating a self-care plan.

    1. Ushering in the New Wave of Conflict Resolution: Tulane University’s Restorative Approach

    Key Takeaway: Learn how Tulane University’s Office of Human Resources and Institutional Equity launched a conflict resolution program, all while successfully managing the pivot to virtual offerings during the pandemic. One of the few university programs in the country to provide a restorative approach, Tulane’s program is a roadmap for fostering and maintaining campus relationships.

    Retention and Recruitment

    Our members offered real-world case studies of talent management and attraction in these feature articles in Higher Ed HR Magazine. They provide success stories and practical tips you can tailor to fit your needs.

    1. Modernizing Workplace Culture and the Employee Experience — Strategies for HR

    Key Takeaway: Workplace culture encompasses so much that it’s tricky to pin down. Jacob Lathrop, consultant to the vice president/CHRO at Michigan State University, defines workplace culture as the feeling employees are left with when they leave work. It’s how they describe their days to family or friends. Old ways of doing things may be harmful to employees’ well-being, while modernizing workplace culture might mean retaining and attracting talent. Lathrop’s tips include embracing flexibility and autonomy, evolving your paid-leave policies, and updating career exploration programs, among others.

    1. A Tale of Two Onboarding Programs: North Carolina State University and
    2. A Tale of Two Onboarding Programs: The University Of St. Francis

    Key Takeaway: A perennially popular topic, onboarding can look very different depending on the institution. In the first article, North Carolina State University’s onboarding manager Amy Grubbs tells the story of their efforts to create consistent new-hire experiences, get supervisors involved in the onboarding process, and bring a full-service Onboarding Center to life through strategic campus partnerships. (Check out Amy’s webinar too, which provides even more information on the Onboarding Center and strategic partnerships.) With more limited resources, Carol Sheetz, formerly of the small, private University of St. Francis, shares her solo effort to build USF’s onboarding program from scratch. This article contains her top tips and resources for other HR pros in the same situation.

    1. Investing in Employees During an Economic Downturn: How We Implemented Our Living Wage Strategy

    Key Takeaway: A decade ago, the Maricopa County Community College District committed to a $30,000 livable wage for its full-time employees, but employees found it challenging to keep up with inflationary pressures and the COVID-related economic downturn. Maricopa responded by raising the livable wage by 15.5 percent, from $14.42 to $16.65. This article explains how HR managed to implement this raise, while preventing additional pay compression and reduced employee morale. (The second phase of MCCCD’s plan, focusing on progressive pay practices, internal pay equity and market alignment, is explored here.)

    1. Recalibrating Employee Recognition in Higher Education

    Key Takeaway: “Most of us continue churning out the same recognition programs — many decades old — often without questioning their value, validating their impact or reviewing for bias,” says author Sharri Margraves, the executive director of organization and professional development for Michigan State University’s human resources. She surveyed 65 higher education institutions to find out how they formally and informally recognize employees. This article not only presents these findings, but also suggests ways to redesign your own recognition program, including a self-audit tool to assess your strengths and weaknesses.



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  • Department of Labor Issues Independent Contractor Final Rule – CUPA-HR

    Department of Labor Issues Independent Contractor Final Rule – CUPA-HR

    by CUPA-HR | January 11, 2024

    On January 10, the Department of Labor’s (DOL) Wage and Hour Division (WHD) published the highly anticipated rule modifying the test for determining whether a worker is an employee or independent contractor under the Fair Labor Standards Act (FLSA). The final rule rescinds the current “core factors” method for determining independent contractor status under the FLSA and implements a return to a “totality-of-the-circumstance analysis.”

    Under the final rule, the method of determining worker classification will use a totality-of-the-circumstance analysis of multiple factors in an economic reality test, including the following six factors.

    • The extent to which the work is integral to the employer’s business.
    • The worker’s opportunity for profit or loss depending on managerial skill.
    • The investments made by the worker and the employer.
    • The worker’s use of skill and initiative.
    • The permanency of the work relationship.
    • The degree of control exercised or retained by the employer.

    Under the final rule, any particular factor could be determinative in establishing a worker’s classification, and additional undefined factors may be relevant in the analysis as well. The final rule is therefore a significant departure from the previous rule finalized in 2021, under which two core factors primarily guided worker classification determinations.

    The WHD has established March 11, 2024, as the effective date of this new rule, meaning institutions will need to be in compliance by then. The rule is likely to be challenged in federal court by business groups, and legislators in the U.S. House of Representatives and Senate have indicated they will introduce resolutions of disapproval under the Congressional Review Act in an attempt to nullify the final regulation. CUPA-HR will keep members apprised of any new updates as it relates to the status of this final rule.



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