The United States Department of Labor just issued new rules, and they became final. This interpretation is for the Fair Labor Standard Act’s classification, not the Internal Revenue or for unemployment purposes. It should be easier under the new regulation to classify workers as independent contractors and not have to classify them as employees. This allows many employers to save money on benefits such as paid leave, overtime pay, and other benefits.
The new regulation uses the “economic reality test.” There are five factors to review.
- The nature and degree of control over the work.
- The worker’s opportunity for profit or loss.
- The amount of skill required for the work.
- The permanence of the relationship.
- If the service being provided is an integral part of the business.
The greatest weight is still given to control. Who has control over the project?
The rule was published in the Federal Register on January 7, 2021, and will take effect 60 days after the publication. There is also the possibility of an amendment or change with the new administration. Practices should be aware of these changes and plan for future employees and contractors accordingly.
Revolution Law Group is located in Greensboro, NC serving individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit www.revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.