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The US Division of Labor enacted a ultimate rule Tuesday designed to safeguard employees from misclassification as “unbiased contractors” reasonably than “staff.” The brand new labor rule supplies higher readability for classification beneath the Honest Labor Requirements Act (FLSA).
Typically, the FLSA ensures staff minimal wage compensation, time-and-a-half for any extra time hours labored, and protections in opposition to office discrimination or employer retaliation. Nevertheless, the FLSA doesn’t lengthen these securities to unbiased contractors. As such, improper classification of staff as “unbiased contractors” can strip a employee of important rights and expose them to exploitation.
The brand new rule reestablishes a beforehand used “totality-of-the-circumstances evaluation.” Extra particularly, it outlines six components helpful to gauge financial actuality and describes how these components ought to be thought of in employee classification. The six components are: (1) alternative for revenue or loss relying on managerial ability, (2) investments by the employee and the potential employer, (3) the diploma of permanence of the work relationship, (4) the character and diploma of management, (5) the extent to which the work carried out is an integral a part of the potential employer’s enterprise, and (6) ability and initiative.
The brand new rule annuls the 2021 Impartial Contractor Rule, which closely prioritized contemplating solely two components – the character and diploma of management over the work and the employee’s alternative for revenue or loss – in figuring out whether or not a employee is an unbiased contractor. Beneath the brand new rule, all six components ought to be thought of equally. In line with the US Division of Labor, the brand new rule “aligns with longstanding judicial precedent on which employers have beforehand relied to find out a employee’s standing as both an worker or unbiased contractor.” It should take impact on March 11, 2024.
Performing Secretary of Labor Julie A. Su mentioned in a publish on X that the rule “will assist create a stage taking part in subject for companies, shield employees from wage theft attributable to classification, and affirm the important function true unbiased contractors play in our economic system by permitting them to thrive.” She additionally described labor protections as “a promise of a flooring beneath which nobody ought to be compelled to dwell and work.”
Previously 12 months, higher employee protections have additionally been afforded on the state stage. For instance, the Washington Supreme Courtroom dominated in December 2023 that immigration detainees employed in personal services are entitled to minimal wage compensation. Moreover, Maine Governor Janet Mills enacted a legislation granting most employees 12 weeks of paid day off (PTO) for household or medical causes.
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