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Employee or Independent Contractor? New Guidance Issued by the Department of Labor

Client Alert

On January 9, 2024, the U.S. Department of Labor (DOL) issued its long-awaited final rule — effective March 11, 2024 — revising its prior interpretation of worker classifications under the federal Fair Labor Standards Act (FLSA).

The new final rule rescinds the standard previously established in 2021, in turn, shifting the analysis of whether a worker is an employee (versus an independent contractor) of a business from a more streamlined “economic reality” test to a more complex “totality of the circumstances” standard.

Understanding and correctly applying this new analysis is critical given the implications of worker misclassification under the FLSA — employees are entitled to minimum wage, overtime pay, and other benefits, whereas independent contractors are not entitled to such benefits but enjoy greater flexibility and independence.

Under the new standard, the following non-exhaustive list of factors will be taken into consideration:

  1. The opportunity for profit or loss a worker might have based on their skillset (i.e., factors that impact a worker’s economic success or failure);
  2. The financial state and nature of any resources (e.g., capital or entrepreneurial) a worker has invested in the work;
  3. Degree of permanence of the work relationship (i.e., whether the work relationship is indefinite versus temporary in nature);
  4. The degree of control an employer has over the person’s work (e.g., who sets the worker’s schedule, who oversees and/or directs performance, and whether the worker can maintain other jobs);
  5. Whether the work the person does is essential (i.e., critical, necessary, or central) to the employer’s business; and
  6. The worker’s skill and initiative, including whether the worker contributes to business-like initiatives.

While the above analysis is, again, limited to worker classifications under the FLSA, it is very likely to have a significant impact going forward as, per the DOL, the final rule is intended to stretch broadly across all industries to “reduce the risk that employees are misclassified as independent contractors while providing a consistent approach for businesses that engage with individuals who are in business for themselves.”

The new final rule, while not controlling law, will inevitably serve as persuasive guidance in federal misclassification cases.

For additional information on the new DOL guidance or how it may impact your company, please reach out to Monica Andress at (330) 253-9153 or mbandress@bmdllc.com, or any member of the Labor and Employment Team of Brennan, Manna & Diamond LLC.


Supreme Court Upholds Coverage under the Affordable Care Act

The U.S. Supreme Court has upheld the authority of the U.S. Preventive Services Task Force under the ACA, ensuring continued no-cost coverage for over 100 preventive health services. The decision impacts millions of Americans and preserves provider reimbursement through insurance.

Health Care Providers Take Note: Federal Budget Brings Medicaid and Staffing Rule Changes

The 2025 federal budget introduces significant changes for health care providers and Medicaid recipients, including new cost-sharing requirements, work eligibility mandates, rural health grants, and a pause on minimum staffing rules.

Key Healthcare Provisions in Ohio’s 2026–2027 Budget

Ohio’s newly enacted biennial budget (HB 96) for FY 2026–2027 brings sweeping changes for healthcare providers across the state. The law includes new Medicaid eligibility requirements, reporting mandates, funding directives, and social policy provisions. Several vetoes by Governor DeWine also affect healthcare-related initiatives.

Providers Beware: Court Sides with Insurers in No Surprises Act Arbitration

On June 12, 2025, the Fifth Circuit ruled in favor of Aetna and Kaiser in two lawsuits brought by air ambulance providers challenging how insurers calculated payments under the No Surprises Act’s Independent Dispute Resolution process. The court held that unless there is clear evidence of fraud or serious misconduct, IDR decisions will stand, reinforcing the finality of the arbitration process.

Introducing HB 281: Enforcement of Federal Immigration Laws in Ohio Hospitals

House Bill 281, introduced on May 20, 2025, would require Ohio hospitals to allow law enforcement, including federal immigration agents, to enter facilities and enforce immigration laws. The bill mandates that hospitals comply with information requests and adopt formal policies, raising significant concerns about patient privacy and access to care for immigrant communities.