BusinessDept. of Labor Clarifying Definition of Independent Contractors

Dept. of Labor Clarifying Definition of Independent Contractors


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A new proposal from the U-S Department of Labor would clearly define what it means to be an independent contractor. Currently, the Department of Labor’s definition refers to independent contractors as, “workers who, as a matter of economic reality, are not economically dependent on their employer for work and are in business for themselves.”

A new definition would more clearly distinguish between them and regular employees, who are covered by more federal labor protections.

Jack Fiorito, a distinguished professor at Florida State University, explained what the new definition would do.

“The Department of Labor is saying, in effect, there are too many instances where people are, for all practical purposes, employees,” Fiorito said, “but are being excluded from these laws because they’re technically considered, according to the contracting party, they’re considered independent contractors.”

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Fiorito said some opposition has come from employers who do not see themselves as such. Others are worried the gig economy would decay since independent contractors would be classified as employees, meaning they would not be making as much money. November 28 is the deadline to submit comments to the Department of Labor about the proposal.

Rapid growth in the recent decade of gig-economy companies that utilize independent contractors has made this rule necessary. But, there could be some big challenges ahead. Fiorito said one of the big ones is that the recent elections will impact whether this proposal comes to fruition.

“If they could do something before the next Congress takes office, that’s about another month or so, that would probably be their only chance to do it, really. Because I think the new Congress with a Republican majority in the House is probably going to be looking to roll back any such regulations that the Department of Labor might be considering rather than expanding those,” Fiorito said.

He remains uncertain as to whether the new Congress will stall on this issue or come together on it. The new rule would have sweeping implications if enacted. According to the Department of Labor estimates, there are about 22.1-million independent contractors across the nation.

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