On Jan. 9, 2024, the U.S. Department of Labor’s (DOL) Wage and Hour Division announced its final rule on Employee or Independent Contractor Classification. The announcement marks the end of a rulemaking process that started with the DOL’s Oct. 22 notice of proposed rulemaking (NPRM) on workers classification under the Fair Labor Standards Act (FLSA) Officials received more than 55,000 public comments in response to the NPRM. The new rule replaces a 2021 policy issued by the Trump administration and is based off an administrative interpretation issued by the DOL under the Obama administration. Like the NPRM, the final rule preserves the use of an “economic realities” test that analyzes an employee’s classification through the totality of the circumstances of the worker-employer relationship.

The DOL’s initial attempt to withdraw the Trump-era rule was stalled after a federal judge found that the DOL violated the Administrative Procedure Act (APA) by failing to properly seek comment or consider policy alternative before delaying and revoking the rule. The new rule will be published in the Federal Register on Jan. 10, and it will go into effect on March 11.

Reality Check: U.S. Department of Labor Finalizes Worker Classification Rule

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