The Department of Labor has proposed a new rule to classify independent contractors. It is more stringent that the last rule, which had a brief life. How big an impact would this rule have? Uber and Lyft stocks tanked after the announcement.
The six non-exhaustive factors DOL would consider in a working relationship to determine independent contractor v employee are:
- Opportunity for profit or loss depending on managerial skill.
- Investments by the worker and the employer.
- Degree of permanence of the work relationship.
- Nature and degree of control.
- Extent to which the work performed is an integral part of the employer’s business.
- Skill and initiative.
President Biden wants the very tough ABC rule California uses. He did not get there yet but as the italicized factors show, the DOL wants workers to be employees. Let’s remember that many other states have strict independent contractor rules under their wage and hour laws (I am looking at you Massachusetts– as your employee friendly former AG gets closer to becoming Governor).
The proposed rule has to wind its way through the process and would likely be adopted in 2023. In the meantime, we have a fixed-fee solution to get your workplace in compliance. Misclassification of employees is expensive: wages, penalties and back taxes to name a few issues. We can help. Contact us.