The United States Department of Labor (USDOL) recently published a final rule about whether to classify workers as employees or independent contractors. It reverses a previous 2021 rule, which had instituted harsher standards that increased the likelihood of an employee being inappropriately classified as an independent contractor. The new rule is intended to help ensure employees are afforded the appropriate protections they are guaranteed under legislation like the Fair Labor Standards Act (FLSA).

What is This New Independent Contractor Rule?

The new rule, RIN 1235-AA43, reverses a 2021 rule that established more stringent rules about how to classify employees, returning it to what the USDOL says is “more consistent with the FLSA as interpreted by long standing judicial precedent.” It re-establishes a multi-pronged analysis that looks at the various aspects of a worker’s job, none of which is weighed more than any other. Based on this analysis, the court determines whether a worker is better classified as an employee or an independent contractor.

What is the Difference Between an Employee and an Independent Contractor?

In simple terms, an employee is a worker that is under the control of their employer, and who an employer is legally responsible for. On the other hand, an independent contractor is a worker who operates outside the direct control of an employer, but who an employer is not legally responsible for. This is based on a number of criteria, including:

  • Does an employer have control over the worker’s schedule?
  • Does an employer provide the worker’s equipment and materials, or do they belong to the worker?
  • Does an employer have the authority to dictate how an employee works?
  • Is the worker’s job an essential part of the employer’s business?
  • Is the worker’s job temporary or permanent?
  • Does the worker have opportunities for profit outside of their employer?

Why Does it Matter How a Worker is Classified?

There are a number of reasons why a worker’s classification matters, for both the worker and the employer. First, an employer is legally responsible for any negligence committed by an employee, but not for anything done by an independent contractor. Second, an employer owes their employee a number of benefits, such as paid time off or worker’s compensation, which they do not owe an independent contractor. Also, an employer is responsible for paying half of an employee’s Social Security taxes, while an independent contractor must pay all of their Social Security taxes themselves. Finally, an employee who works more than eight hours a day or 35 hours in a week is generally entitled to overtime pay, while an independent contractor is not.

How Could This Impact You?

If you are a worker, the question of whether you are an employee or an independent contractor can substantially affect what benefits you are owed, what legal protections you have, and even your tax burden. That is why, if you believe you may have been misclassified by your employer, you should speak to a lawyer with experience handling employment law claims. They can assist you with your case, and ensure you receive the best outcome possible.

Williams Cedar is a law firm dedicated to helping clients with personal injury, environmental law, and civil rights cases. We specialize in assisting clients who have been injured due to exposure to environmental toxins, including veterans and their loved ones. If you need legal assistance due to toxic exposure or other related matters, please give us a call at our New Jersey and Pennsylvania offices at (215) 557-0099, or visit our contact page.

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