In February, the U.S. Department of Labor issued a proposed rule that would make it easier, in at least some circumstances, to classify workers as independent contractors. The proposal returns to an “economic realities” analysis aimed at whether the worker is truly operating a discrete business or is instead economically dependent on the employer for work. This emphasizes two core factors before turning to lesser considerations: (1) the nature and degree of the worker’s control over the work, and (2) the worker’s opportunity for profit or loss based on initiative and/or investment.
Business Takeaway: Getting this wrong carries real, and often costly, consequences. While the current 2024 standard will remain in effect until further notice, now is the time to review your contractor relationships and agreements. Also consider the relationship beyond the contract language—how do things work in practice?