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Federal Register / Vol. 86, No. 4 / Thursday, January 7, 2021 / Rules and Regulations
could promote innovation and certainty in business relationships. The AFPF
agreed that the Department has adequately analyzed potential alternatives as well as selected the least burdensome option under the Unfunded Mandates Reform Act of 1995.
IX. Effects on Families The undersigned hereby certifies that the proposed rule would not adversely affect the well-being of families, as discussed under section 654 of the Treasury and General Government Appropriations Act, 1999.
29 CFR Part 780
Agriculture, Child labor, Wages.
29 CFR Part 788
Forests and forest products, Wages.
29 CFR Part 795
Employment, Wages.

For the reasons set out in the preamble, the Department of Labor amends 29 CFR chapter V as follows:
PART 780EXEMPTIONS
APPLICABLE TO AGRICULTURE, PROCESSING OF AGRICULTURAL
COMMODITIES, AND RELATED
SUBJECTS UNDER THE FAIR LABOR
STANDARDS ACT
1. The authority citation for part 780
continues to read as follows:

Authority: Secs. 119, 52 Stat. 1060, as amended; 29 U.S.C. 201219.

2. Amend 780.330 by revising paragraph b to read as follows:

Sharecroppers and tenant

b In determining whether such individuals are employees or independent contractors, the criteria laid down in 795.100 through 795.110 of this chapter are used.

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PART 788FORESTRY OR LOGGING
OPERATIONS IN WHICH NOT MORE
THAN EIGHT EMPLOYEES ARE
EMPLOYED
3. The authority citation for part 788
continues to read as follows:

Authority: Secs. 119, 52 Stat. 1060, as amended; 29 U.S.C. 201219.

4. Amend 788.16 by revising paragraph a to read as follows:

19:58 Jan 06, 2021

PART 795EMPLOYEE OR
INDEPENDENT CONTRACTOR
CLASSIFICATION UNDER THE FAIR
LABOR STANDARDS ACT

Authority: 52 Stat. 1060, as amended; 29
U.S.C. 201219.

Signed at Washington, DC, this 31st day of December, 2020.
Cheryl M. Stanton, Administrator, Wage and Hour Division.

VerDate Sep<11>2014

Employment relationship.

a In determining whether individuals are employees or independent contractors, the criteria laid down in 795.100 through 795.110 of this chapter are used.

5. Add part 795 to subchapter B to read as follows:

Sec.
795.100 Introductory statement.
795.105 Determining employee and independent contractor classification under the FLSA.
795.110 Primacy of actual practice.
795.115 Examples of analyzing economic reality factors.
795.120 Severability.

List of Subjects
780.330
farmers.

788.16

Jkt 253001

795.100

Introductory statement.

This part contains the Department of Labors general interpretations of the text governing individuals classification as employees or independent contractors under the Fair Labor Standards Act FLSA or Act. See 29 U.S.C. 20119. The Administrator of the Wage and Hour Division will use these interpretations to guide the performance of his or her duties under the Act, and intends the interpretations to be used by employers, employees, and courts to understand employers obligations and employees rights under the Act. To the extent that prior administrative rulings, interpretations, practices, or enforcement policies relating to classification as an employee or independent contractor under the Act are inconsistent or in conflict with the interpretations stated in this part, they are hereby rescinded. The interpretations stated in this part may be relied upon in accordance with section 10 of the Portal-to-Portal Act, 29 U.S.C.
251262, notwithstanding that after any such act or omission in the course of such reliance, any such interpretation in this part is modified or rescinded or is determined by judicial authority to be invalid or of no legal effect. 29 U.S.C.
259.
795.105 Determining employee and independent contractor classification under the FLSA.

a Independent contractors are not employees under the Act. An individual who renders services to a potential employeri.e., a putative employer or alleged employeras an independent contractor is not that potential
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employers employee under the Act. As such, sections 6, 7, and 11 of the Act, which impose obligations on employers regarding their employees, are inapplicable. Accordingly, the Act does not require a potential employer to pay an independent contractor either the minimum wage or overtime pay under sections 6 or 7. Nor does section 11 of the Act require a potential employer to keep records regarding an independent contractors activities.
b Economic dependence as the ultimate inquiry. An employee under the Act is an individual whom an employer suffers, permits, or otherwise employs to work. 29 U.S.C. 203e1, g. An employer suffers or permits an individual to work as an employee if, as a matter of economic reality, the individual is economically dependent on that employer for work. Rutherford Food Corp. v. McComb, 331 U.S. 722, 727 1947; Bartels v. Birmingham, 332
U.S. 126, 130 1947. An individual is an independent contractor, as distinguished from an employee under the Act, if the individual is, as a matter of economic reality, in business for himor herself.
c Determining economic dependence. The economic reality factors in paragraph d of this section guide the determination of whether the relationship between an individual and a potential employer is one of economic dependence and therefore whether an individual is properly classified as an employee or independent contractor.
These factors are not exhaustive, and no single factor is dispositive. However, the two core factors listed in paragraph d1 of this section are the most probative as to whether or not an individual is an economically dependent employee, 29 U.S.C.
203e1, and each therefore typically carries greater weight in the analysis than any other factor. Given these two core factors greater probative value, if they both point towards the same classification, whether employee or independent contractor, there is a substantial likelihood that is the individuals accurate classification. This is because other factors are less probative and, in some cases, may not be probative at all, and thus are highly unlikely, either individually or collectively, to outweigh the combined probative value of the two core factors.
d Economic reality factors1 Core factorsi The nature and degree of control over the work. This factor weighs towards the individual being an independent contractor to the extent the individual, as opposed to the potential employer, exercises substantial control over key aspects of the performance of
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