US: Worker Classification Laws Further Defined

The question of who can be classified as an independent contractor versus who is considered an employee remains a stubborn issue in the United States. In September, the US Department of Labor announced a proposed rule to further define an independent contractor under the Fair Labor Standards Act.

Issues such as the contractor’s economic dependence on the employer, level of control over the work, level of skill involved, and permanence of the work are all brought into consideration. In California, a new regulation, AB 2257, was passed in September that replaces the AB5 bill that placed restrictions on organizations’ abilities to classify workers as independent contractors.

Furthermore, the passage of California’s Proposition 22 ballot question in the November 3rd election has exempted app based drivers as contractors, exempting gig worker platforms such as Uber and Lyft from rules that would require them to classify drivers as employees. The ramifications of this law will likely extend to many companies with similar business models in the future.

Takeaway: Laws governing the definition of an independent contractor will continue to evolve at the federal and state level. Failure to comply could result in significant costs and reduce an organization’s ability to leverage flexible workers. A strategic solutions partner such as AGS can help organizations stay ahead of evolving regulations and more accurately and quickly classify the workers they engage.

US: Worker Classification Laws Further Defined

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