Rewriting the Route: Changes to DOL Independent Contractor Rule

In March 2024, the U.S. Department of Labor (“DOL”) released a new standard to determine when a worker is properly classified as an independent contractor under the Federal Fair Labor Standards Act (“FLSA”). The new standard rescinded previous DOL guidance that, some argue, made it easier for a worker to be classified as an independent contractor. The DOL’s new standard will impact all companies in the transportation industry, but will likely have more far-reaching effects for motor carriers.

While the DOL’s prior independent contractor rule prioritized two “core factors” for evaluating a worker’s status as either an employee or an independent contractor – (1) the nature and degree of the potential employer’s control over the work, and (2) the worker’s opportunity for profit or loss – the new rule uses a utilizes a six-factor economic realities test. This new analysis places greater emphasis on the worker’s entrepreneurial efforts and ability to operate independently from the employing entity. Going forward, the primary inquiry is whether the worker is economically dependent on their employer or in business for themselves.

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