Understanding the difference between an employee and an independent contractor is essential — especially with new changes expected from the Department of Labor (DOL). A shift in guidance may affect how businesses classify their workers moving forward.
Here are four key things to know:
1. The Current 2024 Rule Will No Longer Be Enforced
The DOL has announced it will stop enforcing the 2024 independent contractor rule, which had aimed to expand the definition of who is considered an “employee” under the law. While still technically in effect, the rule will no longer guide future enforcement actions.
2. The DOL Is Returning to a 2008 Standard
Instead, the DOL will rely on a 2008 Fact Sheet that focuses on six factors to determine a worker’s status. These include:
· Whether the work performed is integral to the business
· The permanency of the relationship
· The worker’s investment in equipment or facilities
· The employer’s degree of control exercised
· The worker’s opportunity for profit or loss
· The skill and initiative of the worker
3. More Workers May Be Treated as Independent Contractors
This change is expected to lead to more workers being classified as independent contractors rather than employees — potentially reducing employer obligations related to benefits and protections.
4. Misclassification of Workers Can Be Costly
Improper classification can result in penalties, back pay, and tax issues. With standards evolving every few years, it’s important to carefully review your worker relationships.
If you have questions about how to classify your workers, Fournier Legal Services is here to help. Contact our team today to ensure your business stays compliant.