The U.S. Department of Labor’s independent contractor final rule took effect on March 11th, officially ending the 2021 rule enacted during the Trump administration. The new rule introduces an updated framework for quantifying employer/ independent contractor work agreements. In contrast to the prior regulation, which focused on two central factors, the updated rule adopts a broader perspective, considering six-factors as part of an “economic realities” test to comprehensibly determine how workers should be classified.
The legislation aims to make it more difficult for employers to misclassify workers as independent contractors instead of as employees. Because the rule is now officially on the books and enforceable, wage and hour investigators have an updated toolkit in their ability to crack down on worker misclassification.
“Streamlining and clarifying the test to identify independent contractors will reduce worker misclassification, reduce litigation, increase efficiency, and increase job satisfaction and flexibility,” said Wage and Hour Division Administrator Cheryl Stanton.
With the implementation of the final rule, unscrupulous contractors who exploit workers are going to feel the heat. The new rule is another signal that the Biden administration takes workers’ rights seriously and wants equal protections for anyone and everyone who steps onto a jobsite.
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