Florida employers should familiarize themselves with the U.S. Department of Labor’s (DOL) recently published final rule providing guidance on how to properly classify a worker as an employee or independent contractor under the Fair Labor Standards Act (FLSA). The final rule, which is set to take effect March 11, significantly changes the analysis employers must utilize when determining whether to classify a worker as an employee, entitled to the protections of the FLSA, or an independent contractor, not entitled to the protections of the FLSA. With the large number of small businesses in Florida that depend on independent contractors, Florida employers need to take time to understand the final rule and make any changes necessary to their business model so they can best avoid the serious economic costs of worker misclassification.

The final rule advises employers to analyze the “totality of the circumstances” to determine whether a worker is an employee economically dependent on the employer for work or an independent contractor who is in business for himself or herself. Prior to issuance of the final rule, employers were subject to a five-factor rule published by the DOL in 2021 (2021 Independent Contractor Rule). The 2021 Independent Contractor Rule advised employers that five factors should be considered when determining whether a worker is an employee or independent contractor. The DOL designed two of the five factors—the nature and degree of control over the worker and the worker’s opportunity for profit and loss—as “core factors” most critical in determining worker status. The DOL advised that if the core factors weighed in favor of the same classification, there was a substantial likelihood that the employer properly classified the worker.