For many workers in this so-called “gig” economy, one of the biggest issues they (and the entity that retains their services) must confront is whether that worker is an independent contractor (who is not covered by many of the protections of the Fair Labor Standards Act) or an employee (who, unless exempt, generally is covered by the law.) Often, these classifications are inappropriate and the worker in question, based on the nature of his/her job, qualifies as an employee, not an independent contractor. When that happens, you may have a claim for compensation wrongfully denied to you, meaning you should get in touch with a knowledgeable Atlanta worker misclassification lawyer right away to discuss your circumstances.
A new proposed rule that the U.S. Department of Labor announced earlier this month could make it harder for employers to classify workers as independent contractors. The new rule seeks to limit independent contractor status only to those workers who, “as a matter of economic reality, are not economically dependent on their employer for work and are in business for themselves,” according to the Labor Department.
The existing rule has five “economic realities” to guide the classification of workers as independent contractors versus employees. The rule split those five into two “core factors,” which were the nature and degree of the hiring entity’s control over the work and the worker’s “opportunity for profit or loss,” and three lesser factors, which were the degree of skill the work required, the extent to which the hiring entity-worker relationship was or was not a permanent one, and whether the worker’s work was part of an integrated unit of production.
The New Proposal Would Mean No One Factor Carries Special Weight
Under the new proposed rule the Labor Department just announced, a new six-factor “economic realities” test replaces that group of five. They are:
- the extent to which the work performed is an integral part of the employer’s business,
- the worker’s opportunity for profit or loss depending on his or her managerial skill,
- the extent of the relative investments of the employer and the worker,
- whether the work performed requires special skills and initiative,
- the permanency of the relationship, and
- the degree of control exercised or retained by the employer.
The Labor Department also noted that those determining worker classification using these six factors should employ a “totality of the circumstances” analysis, thereby dispensing with the concept of “core” factors that carry extra weight.
By law, the proposed rule must undergo a 45-day comment period, which would end in late November. A final rule will not emerge until sometime next year at the earliest.
The wrongful classification of a worker as an independent contractor instead of an employee can harm that worker in many ways, potentially depriving them of health care, family leave, unemployment protection, overtime pay, and other benefits to which they are legally entitled. Hiring entities who make mistakes in this area of classification can cause themselves serious harm, too, particularly when it comes to taxes. Whether you’re a worker or an employer, it pays to ensure that your employee-versus-independent-contractor classification is the right one. The knowledgeable Atlanta worker misclassification attorneys at the law firm of Parks, Chesin & Walbert are here to help. Whether you’re an employer seeking to ensure compliance and avoid liability, or you’re a worker seeking to understand and fully protect your legal rights, we offer the clear advice and powerful advocacy you need. Contact us through this website or at 877-986-5529 to schedule a consultation.