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1 1 (September 5, 2024)

handle is hein.crs/goveqnj0001 and id is 1 raw text is: Department of Labor's 2024 Independent Contractor Rule Updated September 5, 2024 On January 10, 2024, the Department of Labor (DOL) issued a rule that identifies criteria for how it classifies whether a worker is an employee or independent contractor for purposes ofthe Fair Labor Standards Act (FLSA), the federal law that establishes minimum wage and overtime compensation standards for most private and public sector employees. Accurate employee classification is important because the rights and protections afforded by the FLSA are available only to employees and not to independent contractors. Misclassifying an individual as an independent contractor may result in not only financial loss for the individual but potential loss in tax revenues for federal and state governments. DOL contends that the new rule will provide uniform guidance to employers and is better aligned with judicial precedent that has interpretated the FLSA. Critics argue that the new rule may discourage the use of contract workers and will force companies to review their current contractor relationships to ensure they have properly classified their workers and avoid possible noncompliance. Some Members of Congress have also criticized the rule. In March, Senator Bill Cassidy and Representative Kevin Kiley introduced joint resolutions-S. J. Res. 63 and H. J. Res. 116-providing for the rule's disapproval under the Congressional Review Act. Still, other Members maintain that the rule will restore basic protections to workers who should be considered employees and not independent contractors. This Legal Sidebar provides background on the FLSA, examines the rule that went into effect on March 11, 2024, reviews the joint resolutions of disapproval, and discusses other proposed legislation in the 118th Congress that would amend the FLSA to identify when an individual may be considered an independent contractor and not an employee. Background The FLSA requires an employer to pay an employee a minimum wage as well as overtime compensation at a rate of not less than one and one-half times an employee's regular rate of pay for hours worked in excess ofa 40-hour workweek. Section 3(e)(1) ofthe FLSA, codified at 29 U.S.C. § 203(e)(1), defines the term employee simply to mean any individual employed by an employer. Courts have construed the term to exclude independent contractors, who are generally believed to be in business for themselves and not economically dependent on an employer for work. Congressional Research Service https://crsreports.congress.gov LSB11156 CRS Legal Sidebar Prepared for Members and Committees of Congress

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