This document provides guidance about what the Department’s new Fair Labor Standards Act (FLSA) Worker Classification Rule means for potential freelancers. As explained in the rule and below, freelancers who have been properly operating as independent contractors under the FLSA under applicable legal precedent will likely continue to be properly classified as independent contractors. The Department’s new rule “recognizes that independent contractors serve an important role in our economy and provides a consistent approach for those businesses that engage (or wish to engage) independent contractors as well as for those who wish to work as independent contractors.” Final Rule, Employee or Independent Contractor Classification Under the Fair Labor Standards Act, 89 Fed. Reg. 1638, 1640 (Jan. 10, 2024) (final rule).

Final Rule Published

The U.S. Department of Labor published a final rule, effective March 11, 2024, revising the Department’s guidance on how to analyze whether a worker is an employee or independent contractor under the FLSA. See 89 Fed. Reg. 1638. This final rule rescinded the Independent Contractor Status Under the Fair Labor Standards Act rule that was published on January 7, 2021 (2021 IC Rule) and replaced it with an analysis for determining employee or independent contractor status that is more consistent with the FLSA as interpreted by longstanding judicial precedent.

A Familiar and Consistent Approach

In the final rule, the Department made clear that it is adopting an analysis “that is essentially identical to the standard it applied for decades prior to the 2021 IC Rule.” 89 Fed. Reg. 1658-59. The Department explained that “workers properly classified as independent contractors prior to the 2021 IC Rule will likely continue to be properly classified as independent contractors under this rule.” 89 Fed. Reg. 1659. The Department emphasized that “because this final rule is aligned with longstanding case law, the Department does not anticipate that independent contractors (who sometimes also self-identify as freelancers or small/micro business owners) who are correctly classified as independent contractors under current circuit case law would be reclassified applying the guidance provided in this rule.” 89 Fed. Reg. 1659. The Department further stated that, while the final rule is intended to “apply to a broad range of work relationships,” 89 Fed. Reg. 1670, any “industry-specific guidance would be better suited to potential subregulatory guidance.” 89 Fed. Reg. 1688. Thus, the Department is issuing this guidance to provide more examples of how the final rule may be applied to various potential freelancer situations. 

Does the Rule Affect Freelancers?

The final rule is broadly applicable to all workers, including freelancers or small/micro-business operators. Freelancers who are in business for themselves will continue to be considered independent contractors under the rule.

Always a Totality-of-the Circumstances Analysis

As the Department states in the final rule, the question of whether a worker is properly classified as an employee or independent contractor is a fact-based, totality-of-the-circumstances analysis and the “operational characteristics of a particular business or industry would not take precedence over the overall inquiry as to whether, as a matter of economic reality, the worker is in business for themself.” 89 Fed. Reg. 1640, 1688.

Examples

Below are examples to illustrate how the analysis in the final rule may be applied to potential freelancers. These are fact-specific analyses. There are multiple other potential fact patterns that may result in the same determination. Similarly, any change in the fact patterns presented could change the ultimate conclusion.

Example 1— Photographer as Independent Contractor

Facts: Worker A works as a photographer. They photograph various subjects, but primarily photograph subjects for use by a variety of local businesses in advertising and marketing materials. At any given time, Worker A has photography projects with a number of different clients. Worker A has a college degree in photography. They own their camera equipment, specialized lighting equipment, and editing software, and they update/replace this equipment as needed. Worker A negotiates their own rates and decides which jobs to take, though their clients often give them detailed instructions about how they want the final product to look. Worker A has their own website with testimonials from former clients, samples of their work, and a listing of services provided. They primarily work from their home, but also regularly work in different remote locations as they choose.

Analysis: The photographer in this scenario appears to be in business for themself and as such would be an independent contractor under the FLSA. As the Department explained in the final rule and as Worker A has done in this example, “an individual photographer who has cameras and related equipment, has software to edit photos, and works out of their home. . . may not have the extent of equipment, software with every capability, or a leased office space like a larger firm, [but] the type of investments that the individual has made are sufficient in this case for the individual to operate independently in the photography field—suggesting independent contractor status.” 89 Fed. Reg. 1679. In addition, Worker A has set up a website advertising their services, negotiates their own rates, and their work “on the whole” demonstrates the use of specialized skills in connection with business-like initiative to build a business. 89 Fed. Reg. 1715 (recognizing that “using specialized skills in connection with business-like initiative does not preclude (and, in fact, may often also include) performance of lower-skilled tasks”). Worker A also has multiple clients on short-term assignments. Although the photographs allow businesses to advertise and market their services, Worker A’s services are not an integral part of their clients’ principal businesses. A client’s use of quality control measures (e.g., detailed instructions about the final product) can be relevant and indicate the type of control that would make a worker more likely to be an employee. 89 Fed. Reg. 1693-94. However, Worker A retains control over many other aspects of the work relationship (e.g., negotiating rates, how to do the work) and the combined weight of other factors weigh in favor of a different outcome. Given the specific facts in this example, the Department of Labor would consider Worker A to be an independent contractor under the FLSA.

Example 2—Journalist as Independent Contractor

Facts: Worker B, a science and technology journalist, writes articles, blog posts, and other content for multiple magazines and online publications. They routinely pitch their own ideas for stories to various publications, as well as report on topics identified by a publication; they are solely responsible for deciding which projects to take. They regularly network to find new work and advertise in industry publications. Some of Worker B’s clients are one-time projects, though they have several long-term relationships with other clients for whom they write repeated content. They negotiate their rate for each project and are given a deadline and a set of industry-standard requirements by which to abide concerning plagiarism and libel. They work when they choose to and use their own judgment when writing content, subject to typical editorial oversight. Worker B occasionally hires and pays a research assistant for particularly complex or fact-intensive projects. Worker B has purchased an upgraded laptop computer, cell phone, and editing software, which are sufficient for Worker B to work as a science and technology journalist. Some of the publications require Worker B to enter data regarding the status of projects into their tracking software.

Analysis: Worker B in this scenario appears to be in business for themself and as such would be an independent contractor under the FLSA. Here, although Worker B is given set deadlines and professional guidelines to follow, they decide: whether to take on an assignment; the substance of the written product (subject to typical editorial oversight); and how, where, and when they perform the work. These facts indicate a high degree of control by Worker B; the fact that the publications may require industry-standard legal compliance regarding plagiarism and libel does not change the analysis of the control factor. As the Department explained in the final rule, “a publication’s required compliance with libel law for a writer is not probative of a worker’s economic dependence on that publication but if the publication instructed how, when, and where the work is performed, that is relevant to the control analysis.” 89 Fed. Reg. 1694. In addition, Worker B negotiates their own rates, is free to work for as many publications as they would like and uses their own initiative to grow and manage their business, including by hiring a research assistant. Although some publications require Worker B to enter status reports into their tracking software, as explained in the final rule, businesses may, for example, “at times use technology to track information critical to their business” and this “can be performed consistent with an independent contractor relationship with a worker, even when the data being collected is generated from the actions of the worker.” 89 Fed. Reg. 1701. (While the final rule notes that the use of technology “to supervise the performance of the work” could change the analysis, 89 Fed. Reg. 1701, as described above, the client is not tracking this data to supervise Worker B’s performance of the work.) Additionally, as explained in the final rule, the Department “clearly recognizes and appreciates that people who are in business for themselves often rely on repeat business and long-term clients or customers in order for their business to remain economically viable or successful.” 89 Fed. Reg. 1687. As the Department stated, there is no scenario in which “a worker who controls conditions of employment, sets their own fees, hires helpers, and markets their business is converted from an independent contractor to an employee solely because they have long-lasting relationships with some clients.” 89 Fed. Reg. 1687. Finally, although writing content for publications may certainly be integral to those publications, “not all workers who perform integral work are employees, and there may be times when this factor misaligns with the ultimate result. This is entirely consistent with the totality-of-the-circumstances approach.” 89 Fed. Reg. 1710. Given the specific facts in this example, the Department of Labor would consider Worker B to be an independent contractor under the FLSA.

Example 3—Graphic Designer as Employee

Facts: Worker C works as a graphic designer for a commercial design firm. The firm assigns work to the designer and pays Worker C an hourly rate not based on how many or which assignments Worker C handles. Worker C has worked for the firm for five years and has a lot of flexibility regarding their schedule, usually working in the firm’s office but sometimes working from home or leaving early/coming in late several days per week. Worker C has been told that they are free to accept or decline as many assignments as they would like, but other workers have been disciplined for declining assignments. Additionally, Worker C must get prior written permission from the firm before accepting any outside design jobs. The firm provides software, a computer, office space, and all the equipment and supplies for the worker. The firm invests in marketing and finding clients and maintains a central office from which to manage services. Worker C occasionally uses their own preferred drafting tools for certain jobs. Worker C is given a 1099 each year by the firm and does not have any formal employment agreement.

Analysis: In this example, the graphic designer is economically dependent on the firm for work and as such would be an employee under the FLSA. Worker C has made little investment here, especially relative to the commercial design firm. As explained in the final rule, a “relatively minor investment in supplies is not capital in nature and does little to further a business beyond completing specific jobs,” thereby indicating employee status. 89 Fed. Reg. 1685. Further, although Worker C has been told that they may decline assignments, other workers have been disciplined for doing so. As the Department explained in the final rule, “in many—if not most—circumstances the actual practices of the parties will be more relevant to the economic reality than reserved rights or unexercised contractual terms (as, for example, where an employer theoretically or contractually permits workers to decline work assignments, but in practice disciplines workers who decline assignments).” 89 Fed. Reg. 1719. Further, as the Department has explained, the fact that the worker is given a 1099 form and does not have a formal employment agreement does not generally indicate whether a worker is an employee or an independent contractor. 89 Fed. Reg. 1717-18. Worker C’s continuous work relationship with the firm weighs in favor of employee status. Additionally, even though Worker C has scheduling flexibility, the firm here controls the economic aspects of the work such as workflow, building of the business, the ability to work for others, and the rate of pay, all weighing in favor of employee status. As noted in the final rule, the control factor analysis should “focus on whether the employer controls meaningful economic aspects of the work relationship because that focus is probative of whether the worker stands apart as their own business.” 89 Fed. Reg. 1693. Given the specific facts in this example, the Department of Labor would consider Worker C to be an employee under the FLSA.

Conclusion

As explained above, many freelancers may not be employees under the FLSA. The Department emphasizes, however, that such an outcome is not automatic, but is based on an analysis of the economic reality of each work relationship. For questions regarding this guidance or other laws the Department enforces, please see contact information below.

Where to Obtain Additional Information

For additional information, visit our Wage and Hour Division Website: https://www.dol.gov/agencies/whd and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243).

This publication is for general information and does not have the force and effect of law and is not meant to bind the public in any way.  This document is intended only to provide information to the public regarding existing requirements under the law or the Department’s policies.