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A proposal today from the U.S. Department of Labor on whether workers are classified as employees or … [+]<\/span> independent contractors would, if implemented, have a ripple effect in the business world and gig economy.<\/span><\/p>\n getty<\/small><\/figcaption><\/figure>\n The U.S. Department of Labor today proposed<\/a> an important change in how workers are classified as employees or independent contractors. If implemented, the rule could have a ripple effect throughout the business world and the gig economy.<\/p>\n The rule would \u201cmake it more likely for millions of janitors, home-care and construction workers and gig drivers to be classified as employees rather than independent contractors,\u201d according to the New York Times<\/em><\/a>.<\/p>\n \u201cWhile independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation\u2019s most vulnerable workers,\u201d Secretary of Labor Marty Walsh said in a prepared statement<\/a>.<\/p>\n \u201cMisclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages. The Department of Labor remains committed to addressing the issue of misclassification,\u201d he commented.<\/p>\n The Department said the new rule would have these effects:<\/p>\n \u201cThe immediate impact of the regulations is that workers are more likely to be classified as employees than as independent contractors,\u201d Jerry Cutler, co-chair of the American Bar Association\u2019s Section of Litigation, Employment and Labor Relations Law Committee and lead author of Legal Guide to Human <\/em>Resources, said via email.<\/p>\n \u201cThe immediate impact of the regulations is that workers are more likely to be classified as employees than as independent contractors,\u201d Cutler, a lecturer at Columbia University School of Professional Studies, observed.<\/p>\n He said this means:<\/p>\n Companies are \u201cwell-advised to begin auditing the work activities of their independent contractors to determine whether they meet the requirements of the proposed regulations,\u201d Cutler recommended.<\/p>\n He said the requirements include:<\/p>\n \u201cUnder the proposed regulations, all of these factors are considered, and no individual factor has a greater weight in determining whether the worker is an independent contractor,\u201d Cutler concluded.<\/p>\n A proposal today from the U.S. Department of Labor on whether workers are classified as employees or … [+]<\/span> independent contractors would, if implemented, have a ripple effect in the business world and gig economy.<\/span><\/p>\n getty<\/small><\/figcaption><\/figure>\n Liya Palagashvili<\/a>, a labor economist at George Mason University\u2019s Mercatus Center, was skeptical that the rule would help independent contractors become employees.<\/p>\n \u201c<\/em><\/strong>Most independent contractors will not benefit from this rule because they are supplemental earners<\/a> who have full-time employment,\u201d she noted.<\/p>\n \u201cThe majority<\/a> of independent contractors prefer to keep their non-traditional jobs because they provide more flexibility than traditional work. Many independent contractors will neither<\/a> become employees nor keep their independent work jobs,\u201d Palagashvili predicted.<\/p>\nStatement By Labor Secretary<\/h2>\n
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Align DOL\u2019s Approach <\/h3>\n
Restore Multi-Factor Analysis <\/h3>\n
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Balanced Analysis<\/h3>\n
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Interpretation Of Economic Reality Factors<\/h3>\n
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Classification <\/h3>\n
Immediate Impact <\/h2>\n
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Begin Auditing Activities Of Freelancers <\/h2>\n
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\u2018Independent Contractors Will Not Benefit\u2019<\/h2>\n
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