The U.S. Department of Labor (DOL) has announced it will issue a proposed rule under the Fair Labor Standards Act (FLSA) on the misclassification of employees as independent contractors. Public forums will be held in June on those who may be affected by employee or independent-contractor classification. An employer forum will be held June 24, and a worker forum will be held June 29. We've gathered articles on the news from SHRM Online and other outlets.
Why the Rule Matters
Under the FLSA, employees are entitled to minimum wage, overtime pay and other benefits. Independent contractors are not entitled to such benefits, but they generally have more flexibility to set their own schedules and work for multiple companies. A Trump administration rule still in effect made it easier for employers to classify workers as independent contractors rather than employees.
Employers Hesitant to Provide Gig Workers with Health Care
Though independent workers often receive health care from an entity other than the businesses they engage with, these workers have cited health care as the benefit most likely to motivate them to work for a company. However, many businesses remain hesitant to offer benefits to independent workers because of the legal risk of creating an employment relationship if the organization pays for benefits.
Trump Administration Rule Is in Effect
During the Trump administration, the DOL issued its rule on independent contractors on Jan. 7, 2021. Under the Biden administration, the DOL delayed the rule on March 4, 2021, and then withdrew it on May 6, 2021. On March 14, 2022, a district court vacated the department's attempts to delay and withdraw the rule. The court determined that the rule took effect as of its original effective date, March 8, 2021, and remains in effect. "We remain committed to ensuring that employees are recognized correctly when they are, in fact, employees so that they receive the protections the FLSA provides," the DOL stated.
(DOL blog)
NLRB Standard Revisited
The National Labor Relations Board (NLRB) also has announced it may replace the existing standard for who is an independent contractor. In a notice issued in The Atlanta Opera Inc. case, the NLRB invited briefs on whether the board should continue to follow the independent-contractor standard set out in a 2019 decision during the Trump administration. The board also asked whether it should return to a 2014 Obama-era standard in its entirety or with modifications.
(SHRM Online) and (NLRB)
SHRM Opposed Withdrawal of the Trump-Era Rule
The Society for Human Resource Management (SHRM) opposed the withdrawal of the Trump-era NLRB rule because the rule provided clarity for HR professionals in establishing and maintaining independent-worker compliance, engagement and management practices. This rule was grounded in sound public policy and case law, SHRM noted.
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