The U.S. Department of Labor has made multiple noteworthy changes in the wake of the transition from President Biden to President Trump in January. The changes remind employers and employees alike of the high impact federal regulations have on wage and hour law. Employers and employees alike should be mindful of the effects of changes and the potential for more. That includes consulting a knowledgeable Atlanta wage and hour lawyer for answers to your questions about your business’s (or your employer’s business’s) compliance.
One of the newest changes took place at the beginning of this month, and it involves backing away from an independent contractor classification rule established last year.
On May 1, the DOL’s Wage and Hour Division issued a new Field Assistance Bulletin (No. 2025-1), which indicated that the department will no longer follow “the 2024 Rule’s analysis when determining employee versus independent contractor status in FLSA investigations.” Instead, according to the bulletin, the division will use an earlier test.
In practical terms, this means that the agency, in carrying out its investigations and enforcement actions, is stepping away from the 2024 rule, which had established a relatively employee-friendly standard. The 2024 rule instructed employers to make classification decisions based on six “economic realities,” which included:
- The degree to which the hiring entity has the right to control how the work is performed
- The worker’s opportunity for profit or loss
- The worker’s investment in equipment or materials required for their work
- The extent to which the work requires a special skill
- The degree of permanence of the working relationship
- The extent to which the work is integral to the hiring entity’s business
The rule further directed using a “totality of the circumstances” standard to determine whether or not the worker was “economically dependent” on the hiring entity.
The Standard the DOL Will Follow Now
Now, the DOL will follow an older test that seeks to ascertain whether or not the worker is in business for themselves. This test looks at several factors, including:
- How integral the worker’s services are to the hiring entity’s core business
- How permanent the relationship is
- How much the worker has invested in facilities and equipment
- How much control the hiring entity has over the worker
- The worker’s opportunities for profit and loss
- The “amount of initiative, judgment, or foresight in open market competition with others required for the success” of the worker
- How much independence the worker has in terms of organizing and operating their business
This earlier test is generally seen as more employer-friendly.
While many observers expect the DOL to establish a new rule governing independent contractor classifications, that has not occurred as of this date.
Georgia has its own state test that determines independent contractor classifications, but that test is used only for independent-contractor-versus-employee classifications in unemployment compensation matters.
Wage and hour law has experienced many changes since the inauguration of President Trump, including rules related to the minimum salary requirement for the executive, administrative, and professional exemption and the test for classifying workers as independent contractors. The team of Atlanta employee misclassification attorneys at the law firm of Parks, Chesin & Walbert is here to help you with all the changes taking place. That includes providing solutions for dealing with what has happened and advice regarding ways to prepare for what comes next. Contact us through this website or at 404-873-8048 to schedule a consultation today.