Multiple U.S. presidential administrations have tried to regulate the independent contractor relationship with businesses. The most recent attempt by the U.S. Department of Labor (DOL) resulted in publishing a new proposed rule on the designation of employee versus independent contractor under the federal Fair Labor Standards Act (FLSA).
A new proposal
The proposal has no impact on classifications under state laws. However, it does detail employees being misclassified as independent contractors in the trucking and gig economy industries. The replacement rule involves a comprehensive, six-factor test that could discourage employers from maintaining independent contractor relationships.
Various scenarios exist. However, the main factor is workers being economically dependent on the so-called “employer” versus running their own business. Many see the proposed rule as not providing guidance to enterprises and instead facilitating a sense of uncertainty for companies that use independent contractors to carry out key aspects of their operations.
A pervasive problem
The issue is not exclusive to so-called independent contractors in the trucking industry. Prominent companies like Pizza Hut, Amazon, Instacart, and UberEats face class action lawsuits valued from $150 million to more than $200 million.
Should the DOL finalize the rule following the recently completed comment period, the new parameters would be issued anywhere from late 2023 to early 2024.
Employee versus independent contractor has been an ongoing tug-of-war for businesses both nationally and internationally. The continuing vagueness of proposed rules and regulations only continues to foster an environment of confusion, not to mention opportunities from companies abusing the nebulous nature of independent workers versus salaried or hourly staff.