Date: January 10, 2024

By: Christopher A. Parrella, Esq., CPC, CPCO, CHC

Parrella Health Law, Boston, Ma.

A Health Care Defense and Compliance Firm

The U.S. Department of Labor (DOL) has issued a pivotal final rule, effective March 11, 2024, fundamentally altering how workers are classified under the Fair Labor Standards Act (FLSA). This change has significant implications for healthcare employers. Our aim at Parrella Health Law is to provide a clear understanding of these changes and how they impact your organization.

 Overview of the New Final Rule

The new final rule addresses the critical issue of determining whether a worker is classified as an employee or an independent contractor under the FLSA. This distinction is crucial as it determines eligibility for minimum wage, overtime pay, and other protections.

Historically, the DOL and courts have used the “economic reality test” to make this determination. This test assesses economic dependence, considering various factors, such as the opportunity for profit or loss, degree of control, permanency, and the nature of the work relative to the employer’s business.

Departure from the 2021 IC Rule

The 2021 Independent Contractor Rule introduced a significant shift by identifying two core factors – the nature and degree of control over the work, and the worker’s opportunity for profit or loss – as most influential in this determination. However, this approach has been rescinded in the new final rule.

Implications for Healthcare Employers

Broader Analysis: The new rule returns to a more comprehensive analysis, considering multiple factors without predetermined weight. This holistic approach may require a more detailed examination of each employment relationship.

Increased Scrutiny: Healthcare providers may face closer scrutiny of their employment practices, particularly regarding workers previously classified as independent contractors.

Record Keeping: Ensure proper documentation and record-keeping for all workers, reflecting their classification under the revised guidelines.

Legal Compliance: Non-compliance risks include potential back wages, legal penalties, and damage to reputation. It’s crucial to align your employment practices with the new rule.

Conclusion

As healthcare defense and compliance experts, we at Parrella Health Law are dedicated to assisting you in navigating these changes. Adhering to the new rule is not only about legal compliance but also about protecting your workforce and sustaining your business integrity.

Should you have any questions or require assistance in aligning your employment practices with the new regulation, please don’t hesitate to contact us at info@parrellahealthlaw.com or at 857-328-0382.

For more detailed information on the final rule and its implications, you can refer your clients to the U.S. Department of Labor’s page: https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking

This source provides comprehensive and official information about the new rule, helping healthcare employers understand their responsibilities and the criteria for worker classification under the updated guidelines.

Christopher Parrella, ESQ, CPC, CHC, CPCO, is the founding partner of Parrella Health Law in Boston, Mass. The firm focuses exclusively on healthcare defense and compliance matters. Chris also travels the country on behalf of a wide range of healthcare organizations, lecturing on a variety of health care enforcement and compliance topics. Chris is one of a handful of health care attorney’s that are also Certified Professional Coders (CPC) and is a member of the AAPC’s National Legal Advisory Board and Ethics Committee.  He is also a Certified Professional Compliance Officer (CPCO) and Certified in Health Care Compliance (CHC.)