Department of Labor Issues Final Rule on Classifying Independent Contractors
On January 9, the U.S. Department of Labor (DOL) released a final rule that changes the criteria employers must use when classifying independent contractors. This new rule does rescind the 2021 rule, under the previous Administration, which offered more flexibilities. The 2021 rule had 2 factors to assess someone being an independent contractor – the degree of control by the employer, and the worker’s opportunity for profit and loss.
DOL is reinstituting older framework, using a test that employing six critical factors to assess if someone is an independent contractor:
• The degree of control by the employer
• The worker’s opportunity for profit or loss
• The skill and initiative required
• The permanence of the working relationship
• The worker’s investment in tools and materials
• The extent to which the worker’s service is integral to the employer’s business
This rulemaking, fully available with a FAQ section here, is set to reduce the number of independent contractors employed by the gig economy. Trucking companies that utilize independent contractors may be affected by this decision depending on their unique workforce arrangements.
This new rule is set to take effect on March 11, 2024. However, it is likely that business groups will challenge this rulemaking in court. NTTC staff will continue to monitor this development.