The Department of Labor is considering a rule change designed to clarify the status of independent contractors under the existing Fair Labor Standards Act.
In a statement, Labor Secretary Eugene Scalia said that once the new rule becomes reality it will not only make it easier to identify employees covered by the Fair Labor Standards legislation, but will support “the freedom and entrepreneurialism associated with being an independent contractor.”
Independent contractors, long a presence in the construction industry as well as many other traditional businesses, make up anywhere from 7 to 10% of the country’s workforce, a percentage that work experts say has increased with the advent of what are known as “gig economy” jobs such as personal shoppers, food delivery drivers, and Uber and Lyft drivers.
The Labor Department’s rule change determination will center on what is called an “economic reality test” in gauging whether a given independent contractor is dependent on the company he or she is doing work for.
A second factor will focus on how much profit or loss control the contractor actually has.
If the proposed rule is finalized, it will mean that such contractors could be protected by wage and hour laws as defined under the Fair Labor Standards Act.
The matter is one that is sometimes thorny, say employment experts.
In a statement, Scalia maintained that the rule change will not be aimed towards “classifying independent contractors as employees. In part, that’s because we recognize there are powerful reasons why some workers would prefer to be independent, rather than accountable to a company as its employee.”
The new proposed rule change comes with a 30-day public comment period that will end on October 22.
By Garry Boulard
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