Got Independent Contractors? See the DOL’s New Proposed Rule!

If you use independent contractors for labor – in particular for driving, delivery and other gig work – be aware. A new proposed rule from the U.S. Department of Labor (DOL) could change how employers determine whether these workers are independent contractors or employees.

On Oct. 11, 2022, the DOL announced its intention to rescind a 2021 change regarding whether a worker is an independent contractor. That rule gave greater weight to two factors in this decision: control over the work being performed, and opportunity for profit and loss.

Instead, the proposed rule requires employers to weigh these two conditions equally with four others:

• The investment the worker makes
• How integral the work performed is to the business
• The degree of permanence in the work relationship
• The degree of skill and initiative expected/required of the worker

The Biden administration stated that the 2021 change in weight resulted in some gig workers – for example, Uber and Lyft drivers, food delivery service drivers, transportation labor and more – unfairly being classified as independent contractors. It also didn’t dovetail with long-standing federal court decisions on the matter.

The goal of the proposed rule is to examine the overall employer-worker relationship for more accurate decisions on employee classification. Employers can consider additional factors if needed. They can also analyze how some practices, like scheduling and price setting, come into play.

The DOL has opened the proposal change for public comment for 45 days. Following that period the change will be modified and/or finalized.

If you have employees that could be affected by the proposed rule, reach out to an HR consultant for guidance. Improperly classifying workers not only creates an unfair work environment, it can also result in steep penalties. A human resources professional will have the knowledge needed to make sure you’re in compliance with DOL regulations.

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