The Biden administration is releasing a brand new labor regulation that will make it more durable for employers to skirt minimal wage and time beyond regulation obligations by labeling staff as “independent contractors.”
The remaining rule, introduced Tuesday and slated to enter impact March 11, seeks to crack down on worker misclassification. Administration officers say that, although many staff could also be legitimately unbiased, others are merely categorized that approach as a cost-cutting maneuver by their employers.
It is probably going the brand new rule will likely be challenged in courtroom by enterprise teams. But Julie Su, the appearing labor secretary, argued that it was a commonsense regulation meant to stop essentially the most weak staff from being taken benefit of.
“I have traveled and talked to workers across the country who are working full time year-round and still struggle to make ends meet because of misclassification,” Su stated on a name with reporters. “They sometimes work side by side with individuals who are properly classified doing the same work. But misclassified employees don’t get paid for all of their hours.”
She known as misclassification “one of the key ways wage theft and exploitation happen.”
“I have traveled and talked to workers across the country who are working full time year-round and still struggle to make ends meet because of misclassification.”
– Acting Labor Secretary Julie Su
The unbiased contractor problem is a serious flash level within the gig financial system, with app-based platforms like Uber and Lyft constructed on the notion that drivers are in enterprise for themselves reasonably than for the tech giants. But the brand new rule would have an effect on every kind of industries through which staff’ unbiased standing may very well be questioned, together with transportation, development, well being care and know-how.
Jessica Looman, administrator of the Labor Department’s wage and hour division, stated the rule rolled out Tuesday would apply solely to the Fair Labor Standards Act, the legislation enshrining a minimal wage and time beyond regulation pay, and it wouldn’t have an effect on different areas of labor legislation, comparable to a employee’s eligibility to unionize.
“It has no effect on other laws ― federal, state or local ― that use different standards for employee misclassification,” Looman stated.
Unlike conventional hourly staff, unbiased contractors will not be entitled to time-and-a-half pay for hours labored past 40 in every week. Looman stated implementing the legislation in opposition to misclassification could be a precedence for the company.
Rather than explicitly saying who’s and isn’t an worker, the regulation lays out the standards the Labor Department would take into account when figuring out whether or not somebody is definitely working independently. For occasion, how a lot management the particular person has over their day-to-day duties, how everlasting the work is and the way integral the work is to the employer’s enterprise.
The rule is extra limiting for employers than one put forth by former President Donald Trump simply earlier than he left workplace, and it’s much like one developed by former President Barack Obama. Biden moved to rescind the Trump regulation shortly after taking workplace, signaling a probable return to the crackdown on misclassification within the Obama period.
Su stated the Trump rule “departed from long-standing judicial interpretations” on the problem.
“The previous rule made it easier for businesses to misclassify workers,” Su stated.
The Labor Department estimates that 22 million U.S. staff are deemed unbiased contractors. Officials have pointed to an estimate from the National Employment Law Project that 10% to 30% of these contractors ought to actually be categorized as staff who could be eligible for office protections and advantages.
By utilizing contractors, corporations can keep away from sure prices related to employment, comparable to payroll taxes and staff’ compensation, and likewise make it tougher for workers to type unions. Worker advocates and labor unions say misclassification has gotten out of hand, with employers utilizing it to foist the normal prices of employment onto staff.
The U.S. Chamber of Commerce and different enterprise lobbies have opposed the unbiased contractor reforms, which the administration first proposed in October 2022. The rule launched Tuesday follows a public-comment interval through which staff and employers got the chance to weigh in. A lawsuit by opponents may delay or block its implementation.
The Labor Department isn’t the one federal company trying to tighten the principles round unbiased contractors. The National Labor Relations Board, which referees union disputes within the personal sector, issued a ruling final 12 months that might result in extra staff being categorized as staff and due to this fact be eligible to discount collectively.
