The Labor Department on Tuesday announced the final version of a rule that will force companies to recognize some workers as employees rather than independent contractors.
The new rules go into effect on March 11 and rescind previous rules that established independent contractors as a separate class of workers under the Fair Labor Standards Act, which went into effect in January 2021 under the Trump administration. . according to To DOL release. This rule requires employers to comply with minimum wage and overtime laws, making labor costs easier for employers who use independent contractors, such as app-based services such as Uber and Lyft, which offer freelance models. It could increase by up to 30%. according to to Reuters. (Related: New numbers show companies are failing 'behind the scenes' in the economy)
“Incorrectly classifying an employee as an independent contractor may result in the worker not receiving minimum wage, overtime pay, or other protections,” the DOL announcement said. “This final rule reduces the risk of employees being misclassified as independent contractors while providing a consistent approach for businesses that engage with individuals who do business for themselves.”
Workers who are considered “economically dependent” on their employer will no longer be classified as contractors under this rule and will instead be considered employees. according to To the D.O.L. The DOL argues that workers commonly referred to as contractors, self-employed, or freelancers are often not actually in “business for themselves” and therefore should be considered employees. There is.
dollar beginning announced a proposal to remove and replace the 2021 rules on October 13, 2022, alleging that independent contractors are “denied critical benefits and labor standards protections.”
ICYMI: The overall unemployment rate remained at 3.7% in December. The unemployment rate has been below 4% for almost two years, the longest period of low unemployment in 54 years. 📉 https://t.co/iFGR6uizeK #job report pic.twitter.com/puOyI9gtP4
— U.S. Department of Labor (@USDOL) January 8, 2024
California enacted a similar law in 2019, but it was later overturned by voters in the state in a referendum in 2020, with 58% voting in favor of removing the rule. A judge in the state later ruled that the referendum violated the authority of the state Legislature, allowing a challenge in the Court of Appeals in March 2023.
“A century of labor protections for working people is premised on the relationship between employer and employee,” acting Labor Secretary Julie Su told reporters on Monday, according to Reuters. Hsu argued that the new rules will benefit low-income workers by giving them legal protections such as a minimum wage and unemployment insurance.
The DOL did not immediately respond to a request for comment from the Daily Caller News Foundation.
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