Who’s Really an Independent Contractor? DOL Finalizes New Rule Clarifying Classification
Earlier this month, the U.S. Department of Labor (DOL) finalized its rules regarding classification of independent contractors. The organization hadn’t previously defined this by regulations, only by guidelines (which are as clear as OSHA “best practices”).
The updated rule creates a six-factor “economic realities” test to determine whether or not a worker is truly an independent contractor under the Fair Labor Standards Act (FLSA). Among others, the test includes factors such as degree of permanence, amount of control the employer holds, and the worker’s skills.
Since Ohio employers aren’t required to cover 1099 employees under their BWC policy, we have a lot of discussions with clients about whether or not a worker actually meets the qualifications of being an independent contractor. Understanding these qualifications is not only important for insurance purposes, but also for recordkeeping, and the application of minimum wage and overtime rules.
Our friends at Roetzel & Andress have done a great job of explaining this new classification rule in a way that’s easy to digest and understand, so we’re deferring to their recent update for the details.
This went into effect March 11, 2024.
