In 2022 the US Labor Department (DOL) issued a new proposed rule for Independent Contractors. The comment period ended in November 2022 and it is anticipated the DOL will issue the final rule in the first quarter of 2023.
If your business is a member of your trade association, it should have kept you informed about the proposed rule. When the final rule is issued it should be able to help you determine how the rule applies to your workers. If not, retain a good labor lawyer to help you. There is a history of federal and state court decisions about the issue.
The following is a brief description of the key criteria in the proposed rule.
- Opportunity for profit or loss depending on managerial skills. The criteria focus on assessing the degree to which a worker’s managerial skills affect the worker’s economic success or failure in performing the work.
- Investments by the worker and the employer. This criterion considers whether any investments by a worker are “capital or entrepreneurial” in nature.
- Degree of permanence of the working relationship. Is the working relationship definite in duration, non-exclusive, project-based, or sporadic based on the worker being in business for themselves and marketing their services or labor to multiple entities?
- The extent to which the work performed is an integral part of the employer’s business.
- Skill and initiative. Does the worker use specialized skills to perform the work and whether these skills contribute to the business-like initiative?
The proposed rule contains sub-criteria for each of the 5 criteria that further define it. The proposed rule is complex and requires interpretation by a good labor lawyer. The DOL does not weigh the criteria. You can access the DOL 5-page proposed rule at www.dol.gov. Many industries use independent contractors such as trucking, medical specialty services, ride-sharing, restaurants, motels, and hotels, and consumer home repair services.
If you have independent contractor workers who become employees by the new rule, you may be able to hire them through a temporary service. Consult your labor lawyer.
Ralph Coker