On January 9th, the US Department of Labor released a final rule which changes the criteria for classifying independent contractors which will take effect on March 11th. Employers will use a new test which includes six factors:
- The degree to which the employer controls how the work is done.
- The worker’s opportunity for profit or loss.
- The amount of skill and initiative required for the work.
- The degree of permanence of the working relationship.
- The worker’s investment in equipment or materials required for the task.
- The extent to which the service rendered is an integral part of the employer’s business.
Each factor carries the same amount of weight as the others. The new rule rescinds a 2021 rule in which 2 core factors (control over the work & opportunity for profit/loss) were used to determine the status of independent contractor. The DOL will be releasing more guidance to assist with the final rule.