FACTORING BLOG

US Labor Shift: Worker Classification Change

The US Department of Labor has issued a final ruling that will require companies to treat certain workers as employees rather than independent contractors.  The rule, which is set to take effect on March 11th, focuses on those “economically dependent” on a company and will impact various industries including trucking, construction, healthcare, and gig workers.  This replaces a previous Trump administration regulation and adopts a standard used by courts considering factors like control over workers and the integral nature of the work to a company’s business.

This ruling aims to crack down on the misclassification of workers in many industries; however, it has garnered attention for its potential impact on gig-based services such as Uber, Lyft, and DoorDash.

While the American Staffing Association states that the ruling is unlikely to have a significant impact on the traditional staffing industry (because the vast majority of temporary workers assigned by staffing firms are classified as W-2 employees), the new rule WILL likely affect app-based job platforms that classify workers as independent contractors.  These app-based platforms have seen rapid growth, especially in the healthcare staffing sector.

For any agency, including healthcare and IT staffing firms, who are utilizing 1099 contractors, you are urged to review these relationships for compliance, balancing flexibility and independence with legal requirements.  Staying informed and adapting strategies to align with the latest regulations is crucial, as misclassification can have serious implications for your business.

Click here for the official ruling from the US Department of Labor.

 

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