DOL Enacts New Independent Contractor Test


On January 9, 2024, the Department of Labor (“DOL”) announced a six-factor test for determining whether a worker is an independent contractor or an employee under the Fair Labor Standards Act (“FLSA”). This new rule takes effect on March 11, 2024.

Classifying workers as independent contractors or employees is extremely important—independent contractors do not receive the protections afforded by the FLSA such as overtime pay, minimum wage, and other requirements.

The DOL’s six factor test considers:

  1. opportunity for profit or loss depending on managerial skill;
  2. investments by the worker and the potential employer;
  3. degree of permanence of the work relationship;
  4. nature and degree of control by the company;
  5. extent to which the work performed is an integral part of the potential employer’s business; and
  6. skill and initiative.

In addition, the DOL utilizes a totality-of-the-circumstances economic reality approach, which allows consideration of other relevant, but not named, factors, which “in some way indicate whether the worker is in business for themself.”

Consider the following checklist if your company engages independent contractors. It encompasses the Department of Labor’s (DOL) new six factors along with a series of questions posed by the DOL pertaining to each factor. Each question is accompanied by a parenthetical indicating whether it favors Independent Contractor or Employee status. Every instance where you mark a box designated as “Employee” or refrain from marking a box labeled as Independent Contractor increases the likelihood of your worker being classified as an employee. Keep in mind, this area of law is highly intricate, and the repercussions for misclassification are substantial. If you harbor any uncertainties, it is advisable to seek the guidance of competent legal counsel.

The Factor Things to Consider
Opportunity for profit
  •      Can the worker negotiate the charge or pay for the work?  (Independent Contractor)
  •      Does the worker accept or decline jobs? (Independent Contractor)
  •  Does the worker choose the order and/or times in which the jobs are performed? (Independent Contractor)
  • Does the worker engage in marketing or other advertising efforts? (Independent Contractor)
  •   Does the worker make decisions to hire others? (Independent Contractor)
  •  Does the worker independently make decisions to purchase materials? (Independent Contractor)
Investments by the workers
  •  Does the worker receive unilateral directions to purchase specific equipment? (Employee)
  •   Does the worker have investments in a business that indicate the worker has an entrepreneurial investment their own company? (Independent Contractor)
Degree of permanence
  •   Is the worker working for the company for an indefinite period? (Employee)
  •    Is the worker exclusively working for the company? (Employee)
  •    Is the worker project-based or sporadic? (Independent Contractor)
Nature and degree of control
  •     Does the worker set their own schedule? (Independent Contractor)
  •      Is the worker’s work supervised closely? (Independent Contractor)
  •  Is the worker permitted to work for others? (Independent Contractor)
  •    Does the worker have the right to discipline their own workers? (Independent Contractor)
  • Does the worker get to set prices or rates for services and the marketing of the services or products provided by the worker? (Independent Contractor)
Relation to employer’s business
  •      Is the work performed by the worker “critical, necessary, or central” to the company’s primary business? (Employee)
Skill and initiative
  •     Does the worker use specialized skills for the work and “those skills contribute to business-like initiative?” (Independent Contractor)
  •    Did the employer provide training for the worker to attain the requisite skills? (Employee)


Brody and Associates regularly advises management on complying with the latest state and federal employment laws. The subject matter of this post can be very technical. It is also an evolving area of law and very fact specific. Our goal here is to simply alert you to some of the new laws which may impact your business.  It is not intended to serve as legal advice. We encourage you to seek competent legal counsel before implementing any of the new policies discussed above.  If we can be of assistance in this area, please contact us at or 203.454.0560.


Updated: Mar 19, 2024

About the author
Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State

you have an employee-related issue including court and agency cases, governmental personnel-related audits, or you need counsel on addressing any employee-related issue.