The United States Department of Labor (“DOL”) recently published a final rule, set to go into effect on March 11, 2024, that lays out a test to determine which workers are employees and which are independent contractors. This rule establishes a list of factors to consider in making that determination and, for all intents and purposes, returns to the pre-Trump era standard.


During the Trump administration, the DOL placed greater emphasis on the degree of control the business exercised over the worker. Now, under the new rule, the focus of the test is the “economic reality” of the relationship – i.e., given the “totality of the circumstances,” is the worker running their own business? No one factor is given more weight, or a predetermined weight, and, in fact, additional factors may be considered if warranted.


The independent contractor factors are:

  1. Opportunity for profit or loss depending on managerial skill;
  2. Investments by the worker and the potential employer;
  3. Degree of permanence of the work relationship;
  4. Nature and degree of control;
  5. Extent to which the work performed is an integral part of the potential employer’s business; and,
  6. Whether the worker uses specialized skills to perform the work and whether those skills contribute to business-like initiative.


Notably, although these factors may look familiar, the DOL has given additional guidance as to how to evaluate each one, so employers should update themselves on DOL’s latest view.  


What should you do?

  • It is a good time to take out and review your independent contractor agreements. 
  • Businesses looking to classify workers as independent contractors should be aware of this rule, too, and work through each of the factors to determine if such a classification is warranted.


Given the current administration’s aggressive posture regarding labor issues, you can expect that enforcement of this rule will be a priority for a DOL seeking to rein in independent contractor designations.  The DOL may be skeptical of independent contractor designations, and businesses should be prepared to defend how they designate workers.  This rule gives them direction on how to do so.


Here at Idaho Employment Lawyers, we are willing and able to help you navigate this and other difficult decisions you need to make regarding the people who work for you. If you have any questions or require our assistance, please contact us at (208) 901-3912 or at [email protected]. Similarly, you can visit our website at idemploymentlawyers.com.