Rocco Cozza • January 16, 2024

Navigating the New Landscape: The DOL's Revised Rule on Worker Classification

Independent contractor


The U.S. Department of Labor (DOL) has introduced a pivotal change in the classification of workers as either employees or independent contractors under the Fair Labor Standards Act (FLSA). Set to take effect on March 11, 2024, this new “Final Rule” aims to provide clarity in a traditionally ambiguous area of employment law.


The rule replaces the previous standard set during the Trump Administration, shifting focus to the "economic realities" of a worker's role in determining their status using a six-factor test. This change is significant as it directly impacts the application of the FLSA, which governs minimum wage, overtime pay, and other employment standards. The Final Rule noted that the six factors are to be applied equally, giving no predetermined weight to one factor over others. No single factor will be dispositive, nor should factors be viewed in isolation. The factors should be viewed on a case by case basis to determine each factor’s relevance.


The DOL's rule identifies the following six-factor "economic reality" test:


1. Opportunity for Profit or Loss: This factor assesses whether the worker has the potential to earn profits or incur losses based on their managerial skills and business decisions.


2. Investments by Worker and Employer: It compares the nature and extent of investments by the worker and the employer. A worker's substantial investment in their tools or business operations might suggest an independent contractor status.


3. Permanence of Relationship: The duration and nature of the relationship between the worker and employer are scrutinized. Long-term or indefinite relationships typically indicate an employee status, while project-based or temporary engagements suggest independent contractor status.


4. Degree of Control: This looks at the employer's control over work schedules, conditions, and methods. Greater control by the employer suggests an employer-employee relationship.


5. Integral Part of Business: If the worker’s role is central to the business, it leans towards an employee status. This point focuses not on the worker, but rather the function they perform.


6. Skill and Initiative: The use of specialized skills and business initiative by the worker is indicative of independent contractor status.


Implications for Workers and Businesses

This rule is crucial for determining workers' eligibility for employment protections under the FLSA. It also has significant implications for how businesses classify and manage their workforce, particularly in the gig economy.


Challenges and Potential Legal Issues

The introduction of this rule has raised concerns about potential confusion and legal challenges. Critics argue that it might lead to misclassification issues, affecting both workers and businesses. The rapid introduction of the rule following a change in administration adds to the uncertainty.


Preparing for the Change

The DOL's new rule on worker classification is a significant development in employment law. It aims to provide clearer guidelines for determining whether a worker is an employee or an independent contractor.  Despite the potential legal challenges, the rule will inevitably face, businesses should seek legal counsel to understand the implications of the new rule and adjust their employment practices if necessary.



Cozza Law Group Business Law Blog

What to Do When a Business Partner Breaches a Contract

By Rocco Cozza • May 10, 2026
Business owners in Pennsylvania depend on clear contracts to formalize relationships and enforce obligations. When a business partner breaches a contract, the next steps may seem unclear. Perhaps you assumed that with a clear contract in place, your partner would never dare violate it. So what happens now? What kinds of penalties might your business partner face? Will you both have to go to court? How can you limit the cost of this contractual dispute and maintain your profit margins? These are all questions worth raising during a consultation with a contract lawyer in Pittsburgh . Review Your Contract to Determine the Next Steps The fact that you already have a contract in place is encouraging. This means that at the very least, your business partner will face certain consequences for breaching the contract. That said, the nature of these consequences depends entirely on your unique contract, and some are less effective than others in holding parties accountable for breaches. Perhaps the most obvious step is to confirm whether your contract has an arbitration or mediation clause. If a clause of this nature exists, you must go through alternative dispute resolution (ADR) before proceeding to a trial. If you are not familiar with the ADR process, you should know that resolving a dispute in private is generally preferable to litigation (trials). From a business perspective, private negotiations cost less. They are also faster, allowing everyone to focus fully on running their respective businesses sooner rather than later. Finally, the confidential nature of these discussions may help protect trade secrets, intellectual property, and other details that could be embarrassing or harmful for businesses. Many people feel that ADR is less stressful than trials. You should also check your existing contract for clauses that outline penalties for breaches. These penalties are often financial in nature, and they can dissuade business partners from violating their contracts. Sometimes, simply reminding business partners of these financial penalties is enough to encourage them to adhere to their contractual obligations. You can discuss potential penalties and outcomes with your business partner without involving a lawyer. This is often referred to as “informal resolution,” and it occurs before the ADR process begins. That being said, you may want to inform your lawyer of any plans you might have for resolving the dispute. If you are not careful, you could violate laws and regulations while negotiating in an informal manner. For example, you could inadvertently violate laws against extortion as you attempt to pressure your business partner into fulfilling the contractual obligation. Pennsylvania also has specific debt collection laws that prevent you from contacting debtors in certain ways or at certain times. Evidence Is Important During a Contract Breach Although you may not need to go to court to resolve the contract breach, it makes sense to begin collecting evidence as soon as possible. You should also be aware that your business partner is probably collecting evidence of their own at the same time. Be extremely careful about how you communicate with your business partner during this time, especially in emails, letters, and text messages. All of these written communications could become relevant in a later trial. Assume that your business partner is taking screenshots of your texts, saving your emails, and making copies of everything. If you’re concerned about saying something that could be problematic during a later trial, consider allowing your business litigation attorney to communicate on your behalf. The type of evidence necessary for a breach of contract lawsuit depends on the type of breach involved. If the breach involves a business partner, you may be facing issues like misappropriated funds, confidentiality breaches, leadership disputes, and failures to contribute equally to the business. In the event of misappropriated funds, financial records may be particularly important. If possible, make copies of bank statements and all other relevant financial documents as soon as you notice the misappropriation. If your business partner refuses to provide certain financial documents to you, rest assured that your lawyer can help you gain access through a pre-trial process called “discovery.” The court can compel your business partner to hand over the documents if they refuse to comply. If you are dealing with a confidentiality breach, you can also gain access to key communications through the discovery process. For example, your business partner might have shared trade secrets or intellectual property with an unauthorized third party through email. You can compel your business partner to hand over these emails, giving you the evidence you need to prove the breach. Perhaps your business partner started making important decisions about the business without your input. Maybe you feel sidelined, and you believe that your business partner is trying to take over the business while forcing you out. In this situation, you need to find evidence that your business partner started making key decisions without your input. If a majority vote was necessary, find evidence that this voting process never occurred. If you believe that your business partner is not doing their fair share of work, you should compile evidence that shows you are doing most or all of the “heavy lifting” when it comes to daily operations. Perhaps you believe that your business partner is profiting from your hard work while doing almost nothing to help the business grow. If your contract states that all partners should make a good-faith effort to contribute, this could constitute a legitimate contract breach. Can a Business Contract Lawyer in Pittsburgh Help Me? A business contract lawyer in Pittsburgh may be able to help if your partner recently breached your contract. While online research may help you understand what happens next, each contract is unique. Because of the varying nature of these contracts, it makes sense to discuss your specific circumstances with a legal professional. Cozza Law Group PLLC has consistently earned mentions in lists like “Pennsylvania Super Lawyers” and “Law Firm 500.” Our attorneys have experience in many different industries, and we have helped companies handle numerous contractual disputes. Contact Cozza Law Group PLLC at 412-453-8673 today to get started. You can also find us online .

The 5 D's of Business That You Must Know

By Matthew Bolewitz • April 20, 2026
the 5 d's of business - a must read for business owners