The LCS Foundation has announced a partnership with the Granger Cobb Institute for Senior Living to provide an annual scholarship to add more professionals to the senior living industry.

The institute was announced for Washington State University in 2017 and dedicated in 2019 to focus on building the future senior living workforce through academic programs, industry partnerships and research. It is named for the senior living industry executive who helped build the Washington State University senior living curriculum and taught a course in senior housing administration before he died in 2015. The senior living management program, launched in 2020, offers industry-driven courses, immersive learning, community operations expertise and industry-expert connections before graduation. 

In December, the program celebrated its first graduate, who earned the degree through the institute’s global campus. Six students have completed the senior living minor, which began in fall 2021, and 25 students are in the pipeline working on a senior living major or minor, according to GCISL founding director Nancy Swanger, PhD. Since offering an elective class in senior living management in 2010, almost 800 students have taken the course, with many now working in the industry. 

“Our program is quite unique in that it is housed in a hospitality school within an accredited college of business. The industry loves the business acumen and relationship-building foci in our curriculum,” Swanger told McKnight’s Senior Living. “The program at Washington State University is relatively new, and having such generous support for our students from LCS lends tremendous validity and credibility to what we are trying to build.”

Swanger added that many industry providers have given their “time, talent and treasure to help the program grow,” and that the LCS scholarship is one of three specifically for students studying senior living.

Swanger is on the board of trustees of the Vision Centre, which is supported by several industry associations — including the American Health Care Association / National Center for Assisted Living, the American Seniors Housing Association, Argentum, LeadingAge and the National Investment Center for Seniors Housing & Care — and working to create university and college programs and facilitate internships to prepare future generations of aging services leaders.

Since 2017, the LCS Foundation has awarded more than $450,000 in scholarships and professional development programs. The foundation also has collegiate partnerships with the University of Northern Iowa, Northwood University and the University of Wisconsin-Eau Claire. Those partnerships have placed senior living experts on advisory boards, developed curricula and helped provide students with interactions to advance their learning.

Other senior living-focused academic programs include an assisted living/senior housing administration concentration at George Mason University, a Master of Arts degree in senior living hospitality at the University of Southern California Leonard Davis School of Gerontology, an undergraduate degree in senior living management in University of Central Florida’s Rose College of Hospitality Management, and Boston University’s concentration in senior living in the Masters of Management in Hospitality degree program.

A significant number of senior living companies have implemented diversity, equity, inclusion and belonging programs in the past year, indicating that more owners and operators are “leaning in” to those initiatives to meet strategic goals, according to new industry research.

But the authors of the report about the results of the 2023 Senior Living DEIB Survey, which was released Wednesday, say it’s time for operators to focus on actions aimed at improving retention in addition to recruiting.

“Organizations should establish a holistic vision for what they are trying to achieve through their DEIB efforts,” they wrote. “It is time to move beyond the focus of just recruiting diverse talent. Companies must foster inclusive work environments that provide a sense of belonging, so that they can retain the talent that they work hard to attract.”

The survey, which continued to track the industry’s progression addressing DEIB initiatives, was conducted by Ferguson Partners and sponsored by the Senior Living DEIB Coalition, a two-year-old partnership among Argentum, the American Seniors Housing Association and the National Investment Center for Seniors Housing & Care.

Although more work lies ahead, Argentum President and CEO James Balda said that it is important to acknowledge the progress to date.

“It is exciting to note that this year’s survey showed an increase in the percentage of companies with formal DEIB programs, from 27% to 40%, which indicates a growing recognition within the industry of the importance and positive impact of promoting diversity, equity, inclusion and belonging among employees and residents,” Balda said in a statement. “A formal DEIB program is an important step to foster a culture of diversity, equity, including and belonging, which also bolsters employee engagement.”

Recommendations

The survey, however, also revealed that well more than 80% of executive positions are held by white employees, presenting a “huge opportunity” for racial/ethnic parity at the executive level with employees of color. More work also is needed at the mid-management level, with women of color leaving at twice the rate of their promotion, according to the report. 

“Senior living is about creating communities where everyone feels welcome and valued,” NIC President and CEO Ray Braun said. “The results of this survey provide us with a roadmap for furthering our DEIB initiatives and creating an industry that is truly inclusive for all.”

DEIB trends

The results also provide a market overview of how the senior living industry is addressing DEIB, according to ASHA President and CEO David Schless. 

“The data collected provides valuable insights into current industry trends, best practices and areas of improvement for those looking to further their DEIB efforts,” he said.

Survey participation increased 36% — from 44 to 60 companies — from 2022. 

According to the results, 40% of respondents have a formal DEIB program in place — up from 27% in 2022 — and 37% have implemented some DEIB initiatives or policies. In addition, 93% of respondents said they are taking steps to recruit potential employees from underrepresented groups, and 95% said they are taking steps to increase retention and promotion rates of members of underrepresented groups.

Other findings:

• The majority of organizations focus on gender (91%), race/ethnicity (98%), sexual orientation (89%) and age (83%) as dimensions of diversity.
• 73% of senior living professionals are women.
• 50% of employees are white, and 46% are people of color.
• 14% of executive management is people of color, and women make up 50% of executives.

In most cases (57%), DEIB initiatives originate in the C-suite (57%), although some initiatives are developed by the human resources department (17%) or by a dedicated DEIB committee (13%).

An executive summary of the survey results is available on Argentum’s website.

During our final session, we tried to help them pare back their goals, but they fell into the problem many companies are facing. They were struggling to prioritize and, against our advice, they felt that they needed to begin to address each item all at once. 

Senior living business leaders and companies are facing a very similar challenge in 2024, and should they fail to focus and prioritize addressing the greatest issues they face, they will soon find themselves asking how they didn’t make any headway in 2024 and what to do about it in 2025.

This can prove challenging, as these companies aim to meet immediate financial targets and operational goals while they also need to lay the groundwork for sustainable growth, innovation and quality improvement in the long term. To cut through the noise, leaders must strategically focus and prioritize the right challenge by determining its urgency over its relative standing in the hype cycle.

So, let me help with that. Here are the four challenges and their implications that leaders and companies could face that must be addressed if they are to not only survive 2024 but thrive.

1. Today’s trendiest AI isn’t everyone’s best tool

Senior living businesses have arrived at a crossroads in 2024. Integrating artificial intelligence into general business practices has become an imperative and an untenable obstacle course.

Many companies are moving forward with the misguided hope that the benefits will outweigh the upfront costs, and that can be true. AI can personalize care, customize resident plans, provide predictive analytics and tell you what your budget could be next year.

Companies, however, will need to make smart choices, as not all AI models are built and, more importantly, trained, equally. Choosing the wrong model means a potential for a closed-loop input system where the model does not consider outside needs of potential future customers other than what it was trained on.

To make the most of AI, businesses should prioritize models that have transparency and ones that can help them fix their fragmented data. Siloed records, notes, charts and schedules in multiple platforms that lack interoperability means there will be limited value in the analytics from a model only able to pull from one source of data. The integration challenges are real, but the potential is transformative.

2. The demographic cliff

It’s not news to you that senior living businesses are facing the stark reality of the increasing number of potential residents and a lack of talent to care for them. As baby boomers continue to age and look to move into active-adult or various other tiered classes of caregiving, not only are the communities lacking or nonexistent, but so are the caregivers. Flexible working options and higher pay elsewhere are fueling resignations.

To address those challenges, businesses need to consider new development routes for staff and properties. Considerations for creativity in how administrative roles are staffed and developed through training and upskilling local community members is one way to start.

Long term, the labor shortage may mean rethinking on-demand workers over full-time hires. Also, there is the potential for modular construction, and investors looking to be recession-resilient could mean new forms of capital that could allow for the right-sizing of the units and technologic improvements needed.

3. Transparency versus personalization versus privacy

Senior living companies have leaned heavily on personalization to drive engagement. Data collection can provide unique offerings, especially with the advent of wearables, which can help customize meal plans, activities, amenities and medicine, but consumers and clients have begun to demand more privacy and protection of their data.

Businesses must become more transparent about where they collect data, where outside data are being used and what is done with them. If done successfully, the transparency can bolster engagement and increase communication between the residents and the communities, another potential data perk.

Equally important will be open communication on issues such as sustainability, social responsibility and employee well-being. Today’s residents and families expect more transparency. Companies that honestly address their practices and shortcomings will build trust. 

4. Inflexibility in your future direction

Operators facing these pressures often suffer from a lack of agility and flexibility in their planning. Anticipating future challenges in healthcare and demographics is crucial yet challenging, especially with limited resources, as those challenges constantly move.

Even with prioritized challenges to address, however, leaders must be open to being nimble enough to adapt their hardened three- to five-year plans while also realizing that type of planning needs to shift to become 10- to 15-year planning. This change will allow them to be ready for shifts in behaviors, to grow as digital health evolves, residents’ preferences morph and staffing dynamics shift.

Allowing for re-perception of the challenges and trends that are faced throughout the year will allow companies to be proactive instead of responsive. Most companies lack this flexibility, which ultimately means they stay the course when they need to pivot and, in doing so, become obsolete to the whims of their clients and residents.

In 2024, these challenges and trends are not just obstacles but also catalysts for innovation and improvement. For business leaders, particularly in the senior living industry, addressing these challenges head-on is not just about survival but also about thriving in an ever-changing landscape. By doing so, you can ensure sustained growth, improved service quality and enhanced operational efficiency, ultimately leading to long-term success and a positive impact on your communities.

Mark Bryan is the senior foresight manager at the Future Today Institute, an advisory firm specializing in strategic foresight aimed at driving corporate strategies that lead to long-term success and resilience. The institute partners with leaders of Fortune 500 companies, world governments and other major organizations to help them pivot, adapt and thrive in the face of disruptive change.

The opinions expressed in each McKnight’s Senior Living guest column are those of the author and are not necessarily those of McKnight’s Senior Living.

Have a column idea? See our submission guidelines here.

California has the largest number of skilled nursing facilities and assisted living communities of any state, according to SNF Data and Statista. 

The current minimum wage increase plan would affect approximately 400,000 workers in the Golden State. It is meant to increase the state’s hourly minimum wage from its current $15.50 for healthcare-related workers. The incremental wage increase for covered workers would be $23 per hour from June 1, 2024, to May 31, 2025; $24 per hour from June 1, 2025, to May 31, 2026; and $25 per hour from June 1, 2026.

The Newsom administration was opposed to the dramatic wage increase at the onset of discussions. Other opponents included the California Assisted Living Association, the California Association of Health Facilities, LeadingAge California and the California Chamber of Commerce, which argued that the “astronomical increase in labor costs that will result from SB 525 is simply not sustainable.”

According to KFF Health News, “the governor’s latest budget asks the state legislature to add an annual trigger making the minimum wage increases contingent on state revenues and to clarify which state employees are included, citing ‘the significant fiscal impact’ of the law.” 

Newsom told reporters Wednesday that he had been assured that such triggers would be forthcoming, “even though it wasn’t in the bill,” multiple media outlets reported. 

“We’re confident all parties that committed to that agreement are going to meet it and do so very shortly,” the governor said.

But other dangers exist, too; the process of hiring can consume substantial amounts of time and resources. Failing to identify unsuitable candidates in a timely manner will result in malinvestment, even if the candidate is never hired.

And yet, hiring remains a top priority. As disconcerting as the stakes may be, properly carrying out background checks is a necessary and ultimately rewarding effort.

To help senior living communities navigate this process successfully, I’ll discuss the three most common errors organizations make.

1.  Ignorance-induced legal risks

Litigation is a top concern for any senior living employer conducting background checks. Employers should ensure full understanding and compliance with both local and federal legislation long before even designing their policy, not to mention running an actual check.

Laws governing the hiring process will vary widely based on location and the nature of the position. They tend to specify certain aspects of the procedure, such as information that must be communicated to candidates throughout the screening process. Restrictions and regulations on using acquired data also are common, with consideration of marijuana use or criminal backgrounds being notable examples.

Whatever the particulars may be, any given organization will be subject to a specific, often unique, set of laws. Failure to adhere to such legislation may expose a company to potential lawsuits, which can easily cost millions of dollars in settlements and legal fees. When it comes to the law, due diligence is always due.

2. Flexibility without framework

Oftentimes, approaching the screening process on a case-by-case basis is the path of least resistance. Although each position should be given unique consideration, improvisation always will land a company in hot water.

The underlying factor here is that lack of consistency increases the likelihood of legal negligence. Without a pre-decided policy, it is much easier for an employer to disregard certain legal guidelines or restrictions that otherwise might be detailed in a well-prepared plan. Once such a policy has been created, staying aligned with the law is merely a matter of ensuring that it remains up-to-date. 

Another serious concern is that an unorganized background check always will lack the efficiency of a carefully designed workflow. Organizing how screenings and communications, among other things, will take place ensures that a company’s background check does not waste resources.  

3. Using unclear criteria

Finally, senior living organizations often try to speed up the screening process by sending all candidates through a single filter. The faults with such an approach, however, are obvious. Unclear criteria consistently will deny competent workers where parameters are too strict and allow unsuitable workers where parameters are too loose. For this reason, companies must establish job-specific criteria.

The first criteria to consider are criminal backgrounds, because — yet again — the law must be considered first and foremost. Legislation often will regulate which workers can be employed in certain fields, such as working with older adults, based on criminal records. Although background checks in this industry are more extensive than in most other industries, some offenses should not disqualify candidates for certain positions.

Non-criminal criteria like work experience, licensing, references, and referrals should also be job-specific. While there is not much flexibility here, organizations must decide for themselves where to set the bar for each position — something that may change with the job market. 

Bottom line

The process of screening candidates for hire is not simple for senior living employers. After all, it is a matter of life and death. With legal and economic concerns around every corner, it is easy to feel overwhelmed. When taken into account, those mistakes cannot only be carefully avoided but can guide a company in executing robust background checks that offer peace of mind and allow its workforce, and living community, to prosper.

Jeff Ernste is chief sales and marketing officer with Minneapolis-based Orange Tree Employment Screening. For more than 30 years, Orange Tree has provided technology-enabled background screening, drug testing and occupational health services for clients nationwide.

The opinions expressed in each McKnight’s Senior Living marketplace column are those of the author and are not necessarily those of McKnight’s Senior Living.

Have a column idea? See our submission guidelines here.

Tuesday’s release of a final rule on worker classification standards surely will trigger many a call to HR for a policy rewrite. And perhaps to legal counsel for advice on how to react.

According to federal regulators, the updated standards promise to bring clarity to the often murky distinction between independent contractors and employees.

Clearly, regulators feel that too many senior living operators — and employers in general, for that matter — are using the “independent” label to identify workers who should rightfully be considered employees.

Specifically, the new rule adjusts the method of analysis and adds criteria for determining which bucket a worker should be placed into.

The Labor Department asserts that the new rule will take a more “holistic” approach that encompasses additional factors and weighs them more evenly in the decision-making process.

But as so often is the case, operators are pushing back against an official narrative that seems to promise help while ignoring burdens.

“We are concerned that the rule, coupled with other proposed federal regulations, will only serve to exacerbate the workforce shortage and wipe out some of the recent modest gains communities have made in recruiting individuals to help care for our seniors,” Argentum Senior Vice President of Public Policy Maggie Elehwany told McKnight’s Senior Living.

Additionally, the changes may place greater legal and financial burdens on senior living operators, suggested Gerald Maatman Jr., partner and chair of the class action practice group at legal firm Duane Morris.

Maatman suggests that implementation of the rule may well prompt more wage and hour misclassification class action litigation in the sector.

Remember that famous line: “I’m from the government and I’m here to help you”?

I guess you could say it took on a whole new meaning this week. Or that at the very least, the old meaning was freshened up.

John O’Connor is editorial director for McKnight’s Senior Living and its sister media brands, McKnight’s Long-Term Care News, which focuses on skilled nursing, and McKnight’s Home Care. Read more of his columns here.

A large national trade group advocating for senior living and other long-term care providers is urging its members to “carefully evaluate their existing classifications” of workers following the Tuesday announcement of a new federal rule pertaining to independent contractors.

“The Department of Labor has put a strong emphasis on ensuring proper classification, and we can expect those efforts to continue,” LeadingAge Vice President of Legal Affairs Jonathan Lips told McKnight’s Senior Living on Tuesday. “Now that the final rule is released, we are carefully reviewing the content and its implications for providers and urge our members to carefully evaluate their existing classifications based on the new regulations.”

The rule comes as senior living providers continue to face workforce shortages and sometimes turn to staffing agencies for help.

Another association, Argentum, said that the rule “unfortunately” will result in many workers being unfairly classified as employees and “depriving them of their choice of the manner in which they wish to work.”

“The senior living industry lost hundreds of thousands of jobs during the pandemic, and while the situation is gradually improving, many communities are still struggling to recruit, hire and retain employees,” Argentum Senior Vice President of Public Policy Maggie Elehwany told McKnight’s Senior Living. “We are concerned that the rule, coupled with other proposed federal regulations, will only serve to exacerbate the workforce shortage and wipe out some of the recent modest gains communities have made in recruiting individuals to help care for our seniors.”

Additional experts are concerned that providers will face greater legal and financial burdens under the rule.

The US Department of Labor announced the final rule Tuesday morning, clarifying its interpretation of the Fair Labor Standards Act’s classification of workers as independent contractors. The final rule largely mirror’s the rule it proposed in October 2022, retaining the framework it laid out for determining independent contractor status versus employee status. 

The new rule restores the multifactor analysis to determine independent contractor status, including any opportunity for profit or loss a worker might have; the financial nature of any resources a worker invested in the work; the degree of permanence of the work relationship; the degree of control and employer has over someone’s work; whether the work done is essential to the employer’s business; and a worker’s skill and initiative.

That “control” piece is something senior living and care providers will be reviewing carefully. 

The DOL said that the new rule will provide “a consistent approach for businesses that engage with individuals who are in business for themselves” and ensure that “employers that comply with the law are not placed at a competitive disadvantage when competing against employers that misclassify employees.”

The US Chamber of Commerce, a national business advocacy organization, called the new regulation “harmful” and “clearly biased” toward labeling most independent contractors as employees, a move it said will “decrease flexibility and opportunity and result in lost earning opportunities for millions of Americans.”

“It threatens the flexibility of individuals to work when and how they want and could have significant negative impacts on our economy,” Chamber Vice President of Workplace Policy Marc Freedman said in a statement. “Making matters worse, the rule is completely unnecessary, as the department continues to report success in cracking down on bad actors that are misclassifying workers.”

Indeed, the Department of Labor frequently reports on employers who pay the price for misclassifying workers as independent contractors rather than employees. In September, for instance, the department reported that a Pittsburgh-based healthcare services provider for people living with dementia or disabilities misclassified two workers as independent contractors, resulting in a recovery of $98,620 in back wages by the federal government. And in 2022, an investigation into a Lansing, MI, adult foster care company’s practice of treating its residential healthcare workers as independent contractors cost it $94,000 in back wages.

In a blog post, law firm Fisher Phillips noted that the DOL’s test applies only to the FLSA and that many states apply their own tests to state-level wage and hour claims. Although some state laws protect the independent contractor relationships if certain criteria are met, other state laws make it more difficult to establish such relationships, the firm said.

Fisher Phillips added that under the new rule, “the risk of misclassification will skyrocket,” with more employers facing potential liability for not paying minimum wage and overtime premiums to their workers.

“The ramifications can be staggering — class-action lawsuits, large settlement demands, backpay, liquidated damages, interst, penalties and attorneys’ fees can all quickly add up,” the authors wrote.

Fisher Phillips suggested that businesses using independent contractors conduct internal audits to assess their risk level for misclassification, update policies and procedures, train managers and work with counsel to evaluate programs and minimize risks.

The new rule rescinds one issued during the final days of the Trump administration in January 2021. The Labor Department under the Biden administration had sought to delay the rule, and then withdrew it in May 2021, believing that it was inconsistent with the FLSA’s text and purpose. A district court, however, in March 2022 determined that the rule had taken effect on its original effective date and remained in effect.

In June 2022, the DOL announced plans to hold public forums to gather feedback on writing a new rule. A proposed rule was issued in October of that year, and the department said it received more than 55,000 comments on the proposal during the comment period and listening sessions. 

The final rule will be published today in the Federal Register (see a PDF here) and will take effect March 11. 

The Labor Department has published answers to frequently asked questions on its website.

For more coverage of the rule, see McKnight’s Long-Term Care News and McKnight’s Home Care.

Increasing COVID-19, influenza and respiratory syncytial virus vaccination rates in older adults is going to require a village to battle vaccine reluctance in the form of misinformation, hesitancy and fatigue, according to senior living experts.

The Centers for Disease Control and Prevention recently released two reports on vaccination coverage and treatment for respiratory viruses. The agency found that vaccine fatigue, inaccurate health information and vaccine hesitancy contributed to lower vaccination rates in older adults. 

A significant challenge is that many people now tend to equate COVID-19 with catching a cold, Argentum Vice President of Government Relations Paul Williams told McKnight’s Senior Living. 

“We need to continue to emphasize how serious these respiratory viruses can be for our residents, who tend to have multiple comorbidities and chronic conditions, putting them at greater risk for serious complications, and even death,” Williams said. “At this point, so many people have made up their minds on vaccination, and trying to get folks to reconsider is an uphill task.”

Many people are “done with COVID” and any discussion of vaccines, he added.

“Vaccine fatigue is real, even though it remains a threat to the older adults we serve,” Williams said.

Raising vaccination rates

According to the CDC, uptake of the updated COVID-19 vaccine is approximately 37% in adults aged 75 or more years, compared with the national average of 19% among all adults. The statistics aren’t much better for the flu and RSV vaccines — only 34% of adults aged 65 or more years had received the flu vaccine as of Oct. 28 and only 17% of adults aged 60 or more years reported receiving an RSV vaccine as of Dec. 23.

Nursing homes have national reporting requirements for resident and staff member vaccination rates, making statistics more readily available than in assisted living, which does not have such requirements. And not all states are mandating or tracking vaccination in senior living community staff members for COVID, RSV or flu.

Williams said that Argentum is hearing that communities with strong leadership often have higher vaccination rates, and that staff members who trust and respect community leaders are more receptive to calls for vaccination and the importance of helping to protect residents and colleagues in the community.

“Communities that involve trusted nurses and clinicians to educate residents and answer questions on the risk and benefits of vaccines have higher rates,” he added. “The use of toolkits and talking points have proven to be helpful but the main barrier to increasing compliance remains ‘vaccine fatigue.’”

Challenges of vaccine reluctance

The challenge in battling vaccine reluctance is not unique to senior living or nursing home providers; it is systemic among the US population at large, according to the American Health Care Association / National Center for Assisted Living.

“As a country, we face significant challenges with vaccine reluctance that require a collective endeavor by public health officials, other healthcare providers and the public,” an AHCA/NCAL spokeswoman told McKnight’s Senior Living. “Assisted living providers remain persistent in talking to family members and residents about their vaccine concerns and appreciate the partnerships of the larger healthcare system to help reinforce the importance of the vaccines.”

Last week, US Department of Health and Human Services Secretary Xavier Becerra met virtually with representatives from LeadingAge and AHCA/NCAL to express concerns about low vaccination rates among residents of nursing homes, which are supported by federal dollars through the Medicare and Medicaid programs. LeadingAge said in a statement after that meeting that it had urged HHS to help ease logistical issues that have slowed vaccination rates and to encourage hospitals to offer vaccines on discharge. 

David Gifford, MD, MPH, chief medical officer of AHCA/NCAL, writing in a column in McKnight’s Senior Living sister publication McKnight’s Long-Term Care News last week, discussed the need for the nation to collectively combat vaccine reluctance. He opined that strides in the right direction since the pandemic have been taken with vaccines, especially in the long-term care industry, but much collective work remains to be done by the healthcare profession to combat widespread hesitancy.

Vaccine fatigue and hesitancy, Gifford said, are “rampant,’ but especially so when it comes to COVID-19 and RSV vaccines. And although vaccine uptake in skilled nursing facilities is higher than in the general community (a number easier to know for nursing homes due to federal reporting requirements), he called for a doubling down on efforts to increase those numbers.

Gifford called for the ready availability of vaccines for residents through on-site vaccine clinics, provider reimbursements and consistent public health messaging. He said many new admissions arrive at an assisted living community or nursing home without being offered or having received the vaccine during visits with physicians in other healthcare settings.

AHCA/NCAL created a #GetVaccinated website last year with resources for providers to secure and administer vaccines on site, as well as resources to help encourage residents and staff members to receive vaccines.

The Department of Labor this morning issued a final rule that will change how senior living companies and other employers determine who is an employee and who is an independent contractor.

The rule is effective March 11.

“The misclassification of employees as independent contractors may deny workers minimum wage, overtime pay and other protections,” the Labor Department said in an online post. “This final rule will reduce the risk that employees are misclassified as independent contractors while providing a consistent approach for businesses that engage with individuals who are in business for themselves.”

The rule also ensures that “employers that comply with the law are not placed at a competitive disadvantage when competing against employers that misclassify employees,” the department said in an email. 

According to the DOL, the final rule:

• Restores the multifactor, totality-of-the-circumstances analysis to assess whether a worker is an employee or an independent contractor under the Fair Labor Standards Act. 
• Ensures that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors. 
• Uses the longstanding interpretation of the economic reality factors. Those factors include opportunity for profit or loss depending on managerial skill, investments by the worker and the potential employer, the degree of permanence of the work relationship, the nature and degree of control, the extent to which the work performed is an integral part of the potential employer’s business, and the worker’s skill and initiative.

The new rule also rescinds one issued during the final days of the Trump administration in January 2021. The Labor Department under the Biden administration had sought to delay the rule, and then withdrew it in May 2021, believing that it was inconsistent with the FLSA’s text and purpose. A district court, however, in March 2022 determined that the rule had taken effect on its original effective date and remained in effect.

That rule, Solicitor of Labor Seema Nanda said at the time, “legally risked increasing instead of reducing misclassifications because it narrowed the facts and basis for determining whether a worker is an employee under the FLSA” and was ”out of sync” with what the courts had been saying for decades.

In June 2022, the DOL announced plans to hold public forums to gather feedback on writing a new rule. A proposed rule was issued in October of that year.

Tuesday, the Labor Department said it had received “thousands of comments from a diverse array of stakeholders that helped inform the regulatory updates” during a comment period that was open through November 2022.

The rule issued Tuesday has not been published in the Federal Register yet but is available as a PDF. Read it here.

Editor’s note, Jan. 10: Read the follow-up story with industry reaction here.