On January 9, 2024, the U.S. Department of Labor (DOL) published a Rule explaining how it determines whether a worker is an independent contractor or employee under the Fair Labor Standards Act (FLSA). This fact sheet explains the difference between employees and independent contractors, what the Rule does and says, and how it may impact workers.
Independent contractors have risks & responsibilities. Employees have rights & protections.
Independent contractors (ICs) run their own businesses. They decide what prices to charge and negotiate contracts with their clients or customers. They decide how to market their goods or services and what business investments to make. ICs earn profits or suffer losses. They are responsible for their own tax contributions. And they lack the benefits, protections, and rights of employees.
Employees depend on another person or business for work. Their employer generally determines their pay and terms and conditions of work. Employees have a right to a minimum wage and overtime, the right to a discrimination-free and harassment-free workplace, the right to join a union and collectively bargain, and the right to a safe and healthy workplace. Employees also have workers’ compensation and unemployment insurance. ICs lack these bedrock rights and protections.
What does the DOL’s Rule do?
The Rule provides guidance for determining who is an IC (and therefore not a protected employee) under the FLSA. It affects only coverage under the FLSA —i.e., the right to a minimum wage of $7.25 per hour, and overtime after 40 hours per week.
When a worker files a complaint with DOL for unpaid wages due under the FLSA, the DOL will apply the Rule to answer any questions about whether the worker was a protected employee or exempt IC. The Rule also helps educate businesses and workers on the scope of the FLSA.
Workers who believe their boss denied them earned minimum or overtime wages may file a complaint with USDOL. For instructions, see: https://www.dol.gov/agencies/whd/contact/complaints.
Download the full fact sheet to read more.
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