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Dive brief:
- Starting March 11, a new Labor Department rule will change the way employers determine whether a The worker is an independent contractor or an employee. The federal rule, first proposed in October 2022 and published in the Federal Register on January 10, will reverse a move made at the end of President Donald Trump’s term.
- The Trump administration’s 2021 change modified worker classification to focus on two factors: nature and degree of control over work and opportunity for profit or loss, according to Foley and Lardner.
- Under the new “totality of the circumstances” framework, a return to the rule before the 2021 change, six non-exhaustive factors will determine workers’ employment status.
Diving knowledge:
Under the new framework, the six main factors considered by the DOL when determining employment status will be:
- The worker’s opportunity for profit or loss.
- Investments made by the worker and the employer.
- Degree of permanence of the employment relationship.
- Nature and degree of control over the execution of the work.
- Measure in which the work performed is an integral part of the entrepreneur’s activity.
- Use of the worker’s skill and initiative.
construction employer groups opposed the change. Ben Brubeck, vice president of regulatory, labor and state affairs for Associated Builders and Contractors, called the standard in the final rule “ambiguous and difficult to interpret” in a statement last week.
The 2021 rule provided clarity and a “proof of consistent, common-sense economic realities,” Brian Turmail, AGC’s vice president of public affairs and strategic initiatives, said in a statement shared with Construction Dive.
“The only certainty to avoid an enforcement action an employer has under this new test is to classify, or misclassify, someone as an employee rather than an independent contractor, potentially stifling the entrepreneurial spirit that has long defined the industry,” Turmail said.
Labor groups, on the other hand, applauded the update.
“Simply put, this rule will guarantee the basic rights of all workers, under the Fair Labor Standards Act,” Mark McManus, general president of the United Plumbers and Pipefitters union, said in a statement shared with Construction Dive.
Worker misclassification is common in the construction industry, with an estimated 1.1 to 2.1 million workers they are misclassified or paid for books in the industry, according to a report by the Century Foundation, a progressive think tank and research group that pursues equity in education, health and employment.
