New IC Test

Originally Published on 6/13/24

The Department of Labor (DOL) has finalized its new rule on worker classification for purposes of the Fair Labor Standards Act (FLSA). Under the rule, a six-factor "economic reality" test will consider: (1) the workers' opportunity for profit or loss depending on managerial skill, (2) investments by the worker and the employer, (3) the permanence of the work relationship, (4) the nature and degree of control exercised by the employer, (5) whether the work performed is integral to the employer’s business, and (6) the worker's skill and initiative. Additional factors may be considered as relevant to determining whether the worker is economically dependent on the employer or in business for themselves. States that use the so-called "ABC" test will not be impacted by the new rule, which is only used for FLSA purposes.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about whether the new DOL independent contractor test will have a positive impact.

Below is a summary of the debate that ensued between the two professors.