DOL Finalizes New Standard on Worker Classification

The Department of Labor has announced that it is finalizing its new rule on worker classification for purposes of the Fair Labor Standards Act (FLSA). Under the rule, a six-factor "economic reality" test will consider: (1) the workers' opportunity for profit or loss depending on managerial skill, (2) investments by the worker and the employer, (3) the permanence of the work relationship, (4) the nature and degree of control exercised by the employer, (5) whether the work performed is integral to the employer’s business, and (6) the worker's skill and initiative. Additional factors may be considered as relevant to determining whether the worker is economically dependent on the employer or in business for themselves. States that use the so-called "ABC" test will not be impacted by the new rule, which is only used for FLSA purposes. For more information on the DOL's test for determining worker classification, visit Tax Facts Online. : Q 8723. Note: Q is updated.