The US Department of Labor has implemented a new rule regarding the classification of workers, replacing the Trump-era standard. This rule, which came into effect today, introduces a stricter six-factor approach to determine whether a worker should be classified as an employee or an independent contractor. The change has been met with resistance from businesses, which have favored the late-standard due to its relative simplicity. Contrarily, the DOL implements this new rule on the basis that it more closely aligns with case law and will aid in preventing worker misclassification. Bloomberg reports the discontent among corporate lawyers concerning the DOL’s enforcement measures even before this rule was finalized.
Notably, the DOL has conveyed that this change is not drastically different from the standards already implemented by the agency, it is simply an official reinforcement of the practices already employed in most cases. Lawyers representing management groups argue that the agency has secretly been applying this broader approach.
Furthermore, lawyers advise their corporate clients to comply with the new rule in anticipation of its official effect; four legal challenges against the rule could see it blocked. The DOL has voiced that this rule is grounded in decades of judicial precedent and will ensure workers receive the benefits and protections they deserve through proper classification.
An overview of the Department’s recent actions shows it’s been trying to abolish the Trump-era rule since President Biden took office. The Biden administration was initially effective in delaying and cancelling the rule, but a federal court reinstated it in March 2022. Consequently, the DOL issued a final rule to replace the earlier version with a broader six-factor economic realities test.
Simultaneously, the Occupational Safety and Health Administration (OSHA) is amplifying its enforcement efforts. The focus of its operations moving forward will be an increase in inspections – the agency is aiming for 34,346 inspections for fiscal 2024, its highest goal since 2015. Policy changes enabling more stringent consequences for violations are also part of this enforcement strategy.