Trump Administration’s independent contractor rule gets replaced with DOL’s new rule coming into force!
Across the board, the North American consulting market is regarded as the most mature region globally. However, the EMEA region – Europe, the Middle East and Africa – leads in terms of market size, holding a 41% share of the overall consultancy economy with Asia at 16%.
In terms of growth momentum, the Asia-Pacific region leads the pack together with other emerging economies, while the EMEA region and North America are booking CAGR growth rates of 3.6% on average.
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Trump Administration’s independent contractor rule gets replaced with DOL’s new rule coming into force!
The U.S. Department of Labour has published its final rule on how to determine whether a worker is an employee or an independent contractor under the Fair Labour Standards Act (FLSA).
The rule, which becomes effective on March 11, 2024, rescinds the 2021 independent contractor rule issued under the Trump administration, replacing it with a six-factor analysis that examines the “economic reality” of an employer-worker relationship.
At its core, the test considers whether the worker depends on the employer for continued employment or truly operates as their own independent business.
Despite the likelihood of legal challenges, impacted employers should consider the final rule as the controlling standard. Employers are advised to assess their existing workforce and practices, particularly those functions consistently outsourced to independent contractors, to identify potential risks and necessary changes.
Be aware that the new DOL rule does not directly impact ABC tests for worker classification in the states that use them (e.g., California, Massachusetts, and New Jersey).
Under the new rule, here are some key factors to consider:
1) The worker’s opportunity for profit or loss,
2) Financial stake or resources a worker has invested,
3) Degree of permanence,
4) Degree of control the employer has over the person’s work,
5) Whether the work is essential to the employer’s business, and
6) Worker skill and initiative.
Note that the DOL emphasizes that no single factor is determinative. The test involves a comprehensive evaluation of all relevant factors to determine the overall nature of a working relationship. As such, the DOL indicates that these factors are not exhaustive, meaning that other factors might be deemed relevant to a given case.
Associated Builders and Contractors today released a statement from Vice President of Regulatory, Labour and State Affairs Ben Brubeck opposing the U.S. Department of Labour’s independent contractor final rule under the Fair Labour Standards Act.
“By undermining the flexible, independent work for millions of Americans, President Joe Biden’s DOL is choosing to move forward with a final rule that creates an ambiguous and difficult-to-interpret standard for determining independent contractor status,” said Brubeck. “Under the rule’s multifactor test, employers will now be forced to guess which factors should be given the greatest weight in making the determination. Instead of promoting much-needed economic growth and protecting legitimate independent contractors, the final rule will result in more confusion and expensive, time-consuming, unnecessary and often frivolous litigation, as both employers and workers will not understand who qualifies as an independent contractor.
Proprietary blog of Karma Global
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