New standards by the federal Department of Labor (DOL) will determine whether you’re an employee or an independent contractor under the federal Fair Labor Standards Act (FLSA). This could decide whether or not you should be paid at least the minimum wage and overtime. New Jersey has its own employee-friendly rule for this issue.
https://kingstonlawgroup.com/are-you-an-employee-or-not-new-federal-rule-on-employee-classification-goes-into-effect-march-11/
2. What will be determined with the New
standards by the federal Department of
Labor (DOL)?
How Does the Economic Realities Test
Work?
What is New Jersey’s Rule?
3. ● New standards by the federal Department
of Labor (DOL) will determine whether
you’re an employee or an independent
contractor under the federal Fair Labor
Standards Act (FLSA).
● This could determine whether or not you
should be paid at least minimum wage and
overtime.
● New Jersey has its own employee-friendly
rule for this issue
4. ● This new final rule rescinds the DOL’s
previous final rule (developed under the
Trump administration) on this topic,
proving these rules aren’t that final.
● Although the new rule (developed under
the Biden administration, called the
economic realities test) is expected to
result in more workers being considered
employees, it doesn’t go as far in that
direction as the ABC test, which New
Jersey and California use when applying
their laws.
5. How Does the Economic Realities Test Work?
The latest final rule applies to those protected by
the FLSA. The following factors will be used when
the DOL decides if someone is an employee or
independent contractor.
1. Opportunity for profit or loss depending on
managerial skill
Accepts or declines jobs
Chooses the order and time when jobs are
performed
Engages in marketing, advertising, or other efforts
to expand their business or secure more work
Makes decisions to hire others, buy materials and
equipment, and rent space
6. 2. Investments by the worker and the
potential employer
This factor covers:
Does the employer spend money to support an
employee, or is the worker spending money to
perform a project, run, and expand their
business? If the employer pays the money, the
person is probably an employee
Is the employer or worker buying tools and
equipment? If the worker spends the money,
they’re probably an independent contractor
Does the worker spend money to expand what
they can do, reduce costs, or find more
customers? If so, they’re probably an independent
contractor
7. 3. Degree of permanence of the work
relationship
It’s more likely the person’s an employee if there’s
no expected end to the relationship, it’s continuous,
or it’s the only work the person does.
4. Nature and degree of control
Facts to consider include whether the potential
employer:
Sets the worker's schedule
Supervises the work’s performance
Explicitly limits the worker's ability to work for
others
Uses technology to supervise the work’s
performance
8. 5. The extent to which the work performed is
an integral part of the potential employer’s
business
This factor depends on whether the function the
person performs is an integral part of the business.
They’re more likely an employee when their work is
central, critical, or necessary to the potential
employer's principal business.
6. Skill and initiative
The person is more likely an employee if the
organization trains them to improve their skills.
The fact the person has specialized skills doesn’t
mean they’re an independent contractor.
9. What is New Jersey’s Rule?
While there are limits on who’s covered by the
FLSA, New Jersey wage and hour law covers all
employees in the state.
The ABC test determines if someone is an
employee protected by the law.
If you fall under the FLSA and New Jersey law,
you should seek whichever provides greater
protection and benefits, given your situation.
10. It presumes the person is an employee unless all of
the following apply:
A. The person has and will be free from control or
direction of the work’s performance, both under
a contract and in fact
B. The person’s service is outside the usual course
of the business, or the service is performed
outside the enterprises’ place(s) of business
C. The worker is usually engaged in an
independently established trade, profession,
occupation, or business
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