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DOL rule proposal could make more workers employees

Oct. 12, 2022 | Zachary Phillips | Construction Dive  Original Source

Dive Brief:

The Department of Labor has proposed a rule change intended to combat employee misclassification. The rule would rescind the 2021 Independent Contractor Rule, which was “out of sync” with how courts have decided misclassification cases for decades, said Solicitor of Labor Seema Nanda in a press call Tuesday.

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Construction — along with healthcare, trucking, retail and food service — is among the industries where the DOL has put emphasis on protecting “low-wage vulnerable workers” from misclassification as independent contractors, Principal Deputy Administrator for DOL Jessica Looman said on the call.

The shift would return the standard to a six-factor “totality-of-the-circumstances” framework, reversing a Trump administration rule that put extra weight on two factors.

Dive Insight:

The Trump administration rule placed more emphasis on two factors: the nature and degree of workers’ control over their work, and the opportunity for profit or loss based on initiative, investment or both.

Under the DOL’s proposed rule, the six factors DOL would consider equally in the assessment of the economic realities of a working relationship include:

  • 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.

The distinction is an important one in construction. Looman said the DOL knows in many cases, individuals are in business for themselves, selling their skills to various employers — a practice that would qualify them as an independent contractor.

Unscrupulous employers who misclassify employees as independent contractors cut costs around labor, but prevent the worker from properly collecting minimum wage, benefits, overtime and medical or family leave that they may be owed, Looman said. In doing so, those employers harm not only the worker and their families, but other businesses that follow the rules.

Ben Brubeck, vice president of regulatory, labor and state affairs for Associated Builders and Contractors, vehemently opposed the rule change in a statement emailed to Construction Dive. In it, he said ABC would challenge the DOL if it undermined independent contractors.

Brian Turmail, vice president of public affairs and strategic initiatives for Associated General Contractors of America, said the trade association is still analyzing the rule, which mirrors guidance from the Obama administration.

“We worry that this rule will go well beyond its ostensible mission of protecting workers and instead stifle the many entrepreneurial opportunities that have long existed in the construction industry,” said Turmail.

The DOL will publish the official notice of rulemaking on Oct. 13 to help employers make the determination if workers are employees or independent contractors under the Fair Labor Standards Act. A 45-day comment period will open up after, so employers can give the DOL feedback on the change.


Biden labor proposal shakes up gig economy that relies on contractors

October 11, 2022 Fox Business  Article

WASHINGTON – The U.S. Department of Labor proposed a rule on Tuesday that would make it more difficult for companies to treat workers as independent contractors, a change that is expected to shake up the business models of the ridesharing, delivery and other industries that rely on gig workers.

Shares in Uber and Lyft traded sharply down Tuesday morning.

The proposal would require that workers be considered a company’s employees, who are entitled to more benefits and legal protections than contractors, when they are “economically dependent” on the company.

The Labor Department said it will consider workers’ opportunity for profit or loss, the permanency of their jobs, and the degree of control a company exercises over a worker, among other factors.

Most federal and state labor laws, such as those requiring a minimum wage and overtime pay, only apply to a company’s employees. This means employees can cost companies up to 30% more than independent contractors that many industries have come to rely on, according to some studies.

U.S. Labor Secretary Marty Walsh in a statement said businesses often misclassify vulnerable workers as independent contractors.

“Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages,” Walsh said.

The rule, which will take at least several months to finalize, would replace a Trump administration regulation that says workers who own their own businesses or have the ability to work for competing companies, such as a driver who works for Uber and Lyft, can be treated as contractors. The new proposal adopts a broader definition of who counts as an employee, mirroring legal guidance issued by the Obama administration that was withdrawn by the Labor Department under former President Donald Trump.



More than one-third of U.S. workers, or nearly 60 million people, performed some sort of freelance work in the past 12 months, a December 2021 survey by freelancing marketplace Upwork showed.

Groups representing businesses including the U.S. Chamber of Commerce, which is the largest U.S. business lobbying group, the National Association of Home Builders, the National Retail Federation and Associated Builders and Contractors had met with White House officials to lobby for a more business-friendly standard.

Those groups have said that any broad rule would hurt workers who want to remain independent and have flexibility.