Tag: Contractor

  • WHD Issues Enforcement Guidance on Independent Contractor Classification – CUPA-HR

    WHD Issues Enforcement Guidance on Independent Contractor Classification – CUPA-HR

    by CUPA-HR | May 5, 2025

    On May 1, the Department of Labor’s Wage and Hour Division (WHD) issued a field assistance bulletin providing guidance on determining employee or independent contractor status under the Fair Labor Standards Act (FLSA) while DOL reviews the 2024 final rule, Employee or Independent Contractor Classification Under the Fair Labor Standards Act. The rule currently faces legal action in multiple federal court cases in which the Trump DOL has taken the position that it is reconsidering the 2024 rule, including whether to rescind the regulation.

    Simply put, the bulletin states that WHD “will no longer apply the 2024 Rule’s analysis when determining employee versus independent contractor status in FLSA investigations.” Instead, WHD will enforce the FLSA’s worker classification rules according to Fact Sheet #13, which was issued in 2008, and Opinion Letter FLSA2019-6, which was issued during President Trump’s first term.

    The opinion letter from Trump’s first term articulates WHD’s position on gig economy worker classification, ultimately finding such workers to be independent contractors because they work for the consumer and do not fit “any traditional employment paradigm” under the FLSA. The Biden administration previously withdrew the opinion letter, but it has now been reinstated as Opinion Letter FLSA2025-2.

    Fact Sheet #13 provides a broader perspective regarding the meaning of “employment relationship.” It specifically asserts that an employee under the FLSA is “one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business which he or she serves,” and that an employer-employee relationship under the law is tested by “economic reality.” It also lists seven factors that are considered significant by the Supreme Court in determining employee classification under the FLSA:

    • The extent to which the services rendered are an integral part of the principal’s business;
    • The permanency of the relationship;
    • The amount of the alleged contractor’s investment in facilities and equipment;
    • The nature and degree of control by the principal;
    • The alleged contractor’s opportunities for profit and loss;
    • The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor; and
    • The degree of independent business organization and operation.

    Looking Ahead

    The field assistance bulletin changes the enforcement priorities of WHD with respect to worker classification, though the Biden administration’s independent contractor rule remains in effect for the time being. Legal challenges against the Biden rule are ongoing, and the Trump administration has started reviewing the regulation, though there is no official process yet to rescind it.

    CUPA-HR continues to monitor for updates related to the independent contractor classification regulations and will keep members informed of future updates.



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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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