Final rule published on classifying workers as employees or independent contractors.
Rescinding a 2021 independent contractor rule, the U.S. Department of Labor (DOL) announced this week a finalized update to the classification standard, a rule which NSBA cautioned against.
“The previous 2021 rule that DOL has rescinded was a simple, clear, and effective solution to worker classification problems,” stated NSBA President and CEO Todd McCracken. “Unfortunately, this new far-reaching standard threatens to muddy the water and make contracting relationships difficult both for small businesses employing contractors, and for the independent contractors themselves.”
The new rule requires an expanded, multi-factor economic realities test that considers the working relationship to determine whether the worker is truly in business for themselves. The rule will be a return to a “totality-of-the-circumstances” analysis, evaluating all of the factors involved in the working relationship equally.
NSBA opposed the change and urged further study and delay by DOL. This massive change to the worker classification rules not only will add burdens and complexity to small businesses, but the nonstop back-and-forth with this particular area of labor law created instability for small employers.