The United States Department of Labor finalized a decision that may make it easier for “gigantic” companies to classify their workers as independent contractors, rather than employees who can claim legal benefits. The Trump administration released its final version of the rule today, and it is expected to go into effect on March 8, although that may change after President-elect Joe Biden takes office in January.
The DOL proposed a new framework last year to classify employees and contractors. It focuses on two “central factors” to distinguish the two: the “nature and degree of control over work” and the “profit or loss opportunity” based on initiative and investment. It also lists additional “indicators” that include “the amount of skill required” for the job, the “degree of permanence” of the employment relationship and whether the job is part of an “integrated production unit”.
Like The New York Times observed last year, the rule is to interpret existing regulations, rather than establish new ones, and only covers federal laws enforced by DOL. States can still establish their own definitions – like California’s Prop 22, which specifies that Lyft and Uber drivers are not employees. However, it can still largely influence how companies define their workers. The nonprofit labor rights group National Employment Law Project called this a “tightening” of standards, rather than a significant clarification.