Dept. of Labor has issued final rule on determining independent contractor vs. employee

29 CFR Parts 780, 788, and 795

On January 6, 2021, the Department of Labor (Department) announced a final rule clarifying the standard for employee versus independent contractor under the Fair Labor Standards Act (FLSA). The effective date of the final rule is March 8, 2021.

In the final rule, the Department:

  • Reaffirms an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (FLSA employee).

  • Identifies and explains two “core factors” that are most probative to the question of whether a worker is economically dependent on someone else’s business or is in business for him or herself:

    • The nature and degree of control over the work.

    • The worker’s opportunity for profit or loss based on initiative and/or investment.

  • Identifies three other factors that may serve as additional guideposts in the analysis, particularly when the two core factors do not point to the same classification. The factors are:

    • The amount of skill required for the work.

    • The degree of permanence of the working relationship between the worker and the potential employer.

    • Whether the work is part of an integrated unit of production.

  • The actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible.

  • Provides six fact-specific examples applying the factors.

NOTE: This will have a very significant impact on horse-related businesses, especially stables and trainers.

The final rule was published after a very lengthy commentary in the Federal Register on January 7, 2021. You can read it at

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Thanks for the heads up: this has the potential to be interesting, and not in a comfortable way for some people…

as usual the simple outline of the announcement above takes 81 pages to explain (the PDF file of the ruling in the above attached link)

Yes, typical legal brief on the issue trying to justify what they did

I think everyone needs to have a lawyer look over their contracts/agreements(verbal and written) to make sure they don’t get sideways with the IRS or the Labor Board.

I am willing to admit that I read the original post here and I had no idea what it said.

Thankfully it does not apply to me. (Simple hourly employee in an office and that is my only job right now.)


Interesting. So once the person who, say, cleans stalls is declared to be an employee rather than an independent contractor, does that mean they also fall under the rules about whether an employee can be salaried or must be paid hourly, including overtime? Or do the agricultural employee exemptions kick in, since horses are livestock?

Washington State has already declared dairy workers are covered by overtime rules…and the expectation is ALL farm workers in Washington will be covered…and expect that you will be required to provide health insurance also

A divided Washington Supreme Court ruled Thursday the state’s dairy workers are entitled to overtime pay if they work more than 40 hours a week, a decision expected to apply to the rest of the agriculture industry.

For the past 60 years, state law — like federal law — has exempted farmworkers from classes of workers who are entitled to overtime pay, but in a 5-4 ruling the court found that unconstitutional. The majority said the Washington state Constitution grants workers in dangerous industries a fundamental right to health and safety protections, including overtime, which is intended to discourage employers from forcing employees to work excessive hours.

The ruling applied directly only to the dairy industry, but its reasoning covers all of the 200,000-plus farmworkers in the state’s $10.6 billion agriculture industry,

I’m hopeful that these changes will make a market for the necessary insurance and tax compliance.

I just want something easy like the site that exists for housekeepers and nannies, but for farm workers who deal with pointy tools and large animals.

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