The U.S. Labor Department ‘Proposes New Pro-Employer Rule’ On Gig Workers
(WASHINGTON, D.C.) - A proposed U.S. Labor Department rule aims to change the standards for determining who is an Independent Contractor, or Gig Worker, making it easier for Working People to be denied the benefits of full employment.
“This rule ‘only serves to help unscrupulous employers at the expense of Working People,’” IBEW International President Lonnie Stephenson said. “And ‘to do so at a time of such economic uncertainty is particularly egregious.’”
The proposed rule, announced in late September, sets a framework to determine whether someone is an Independent Contractor or a full-fledged Employee.
If they’re considered a Contractor, companies don’t have to pay for protections like health care, paid time off, overtime or a share of Social Security taxes, or contribute to unemployment insurance and provide Workers' Compensation.
The proposal is an interpretive rule, not a regulation with the force of law, but it could still have significant influence if it were finalized.
And, it’s a more employer-biased interpretation of Employee Status than what was applied during the Obama Administration.
The proposed rule adopts an “economic reality” test for determining who qualifies as an Independent Contractor.
The two main factors are that the Worker must be in business for themselves and not economically dependent on the employer for work.
It also factors in the degree of control someone has over their job and whether their earnings come from their initiative or by simply earning a wage.
If needed, the department said it would look at additional “guideposts” for clarification, like how much skill the work requires and whether the relationship between the Worker and company is permanent or temporary.
“It’s ‘certainly a narrowing of the test,’” Catherine Ruckelshaus, General Counsel of the National Employment Law Project (NELP), told The New York Times.
“Employers ‘know the rules.’ Workers ‘know the rules.’ Employers ‘just don’t like where the lines are between Employee and Independent Contractor.’ ‘There really isn’t very much confusion,’” Ruckelshaus said.
The proposal will be subject to a 30-day comment period once it’s published in the Federal Register.
Bloomberg Law noted that Department of Labor leadership is making it a priority to finalize the regulation before the end of Republican President Donald Trump‘s term on January 20th, a timeline it called “unusually short for a rule that would have ramifications throughout the economy.”
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