The US Division of Labor enacted a remaining rule Tuesday designed to safeguard staff from misclassification as “unbiased contractors” reasonably than “workers.” The brand new labor rule offers better readability for classification beneath the Fair Labor Standards Act (FLSA).
Usually, the FLSA ensures workers minimal wage compensation, time-and-a-half for any additional time hours labored, and protections in opposition to office discrimination or employer retaliation. Nevertheless, the FLSA doesn’t prolong these securities to unbiased contractors. As such, improper classification of workers as “unbiased contractors” can strip a employee of important rights and expose them to exploitation.
The brand new rule reestablishes a beforehand used “totality-of-the-circumstances evaluation.” Extra particularly, it outlines six elements helpful to gauge financial actuality and describes how these elements must be thought-about in employee classification. The six elements are: (1) alternative for revenue or loss relying on managerial ability, (2) investments by the employee and the potential employer, (3) the diploma of permanence of the work relationship, (4) the character and diploma of management, (5) the extent to which the work carried out is an integral a part of the potential employer’s enterprise, and (6) ability and initiative.
The brand new rule annuls the 2021 Independent Contractor Rule, which closely prioritized contemplating solely two elements – the character and diploma of management over the work and the employee’s alternative for revenue or loss – in figuring out whether or not a employee is an unbiased contractor. Beneath the brand new rule, all six elements must be thought-about equally. In line with the US Division of Labor, the brand new rule “aligns with longstanding judicial precedent on which employers have beforehand relied to find out a employee’s standing as both an worker or unbiased contractor.” It can take impact on March 11, 2024.
Performing Secretary of Labor Julie A. Su said in a submit on X that the rule “will assist create a degree taking part in subject for companies, shield staff from wage theft attributable to classification, and affirm the very important function true unbiased contractors play in our financial system by permitting them to thrive.” She additionally described labor protections as “a promise of a ground beneath which nobody must be pressured to stay and work.”
Up to now 12 months, better employee protections have additionally been afforded on the state degree. For instance, the Washington Supreme Courtroom ruled in December 2023 that immigration detainees employed in non-public services are entitled to minimal wage compensation. Moreover, Maine Governor Janet Mills enacted a legislation granting most staff 12 weeks of paid day off (PTO) for household or medical causes.