The Department of Labor’s Proposed Changes to Independent Contractor Status – What You Need To Know

On September 22, 2020, the U.S. Department of Labor (“DOL”) announced that it was opening for public comment a revised interpretation for determining whether workers are “employees” or “independent contractors” under the Fair Labor Standards Act (“FLSA”). While seemingly innocuous, the question of whether a worker is an employee or independent contractor impacts various employment related benefits and protections, such as overtime and minimum wage guarantees,  record keeping requirements, tax withholdings, contributions to social security and unemployment insurance, whether a worker is entitled to worker’s compensation or fringe benefits like sick leave, healthcare coverage, or vacation time. The list could go on. While these protections originate from multiple state and federal laws, the DOL’s new interpretation only applies to the FLSA. Among other things, the FLSA specifically sets the federal minimum wage for every hour worked, mandates that employers pay employees time-and-a-half for every hour worked over forty (40) in a workweek, and requires that employers keep records of the hours worked by their employees, but not independent contractors. Should the DOL’s new interpretation be implemented it could have broad effects on workers nation-wide.  

The Noble Law’s managing partner, Laura Noble, appeared on WRAL 5 On Your Side to speak with Monica Laliberte and provide North Carolinians with an update on the latest in employment law.

https://www.youtube.com/watch?v=dfswVJC-P44

*Originally aired October 22nd, 2020

WRAL Story

Transcript

Gerald Owens: Time is running out to weigh in on a proposal that could affect employees and many types of businesses. 5 On Your Side’s Monica Laliberte explains the new rule being considered by the US Department of Labor

Monica Laliberte: The change would widen the parameters of when an employee could be considered an independent contractor. Why does that matter? Well some legal experts say it would impact workplace legal protections and benefits.

IT jobs, service technicians, service workers, even white-collar jobs.

Laura Noble: It really could affect a broad range of individuals across a broad range of industries.

Monica Laliberte: More and more employees could be hired as independent contractors. With that status, you don’t have protections under the Fair Labor Standards Act (FLSA).

Laura Noble: You can’t claim rights to overtime pay and minimum wage, but also other employment right protections in the workplace like worker’s compensation, unemployment insurance, protections against discrimination in the workplace.

Monica Laliberte: Attorney Laura Noble specializes in employment law. She says the change in job classification would also impact benefits.

Laura Noble: You’re not going to have paid vacation time or paid sick leave, or healthcare, or dental, or a 401K, or a pension plan. That’s going to be something that you’re going to have to pay for out of your own pocket.

Monica Laliberte: Those who support the update say the current rule needs clarification. They also believe loosening will encourage entrepreneurship. The Labor department says the change will “reduce litigation, increase efficiency, and increased job satisfaction and flexibility.”

For companies, they don’t have to be concerned with payroll tax, social security, or worker’s compensation with contract workers. That’s an added financial benefit for them. You can weigh in on the issue through the labor department’s website through Monday. Noble wants to get the word out because she’s concerned many employees who could be impacted have no idea.

Monica Laliberte: I have a link to share comments with my story on WRAL.com. They will be reviewed, but this change could be adopted as early as December.

Follow the link in the button below to the Federal Register to leave a public comment on why this proposed change should not occur.

 

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