New US Rule Will Give Independent Workers Benefits, Legal Protection
WASHINGTON D.C. – The US Department of Labor is planning to release a final rule this week that will make it more difficult for companies to classify workers as independent contractors instead of employees. The rule, first proposed in 2022, aims to provide workers with additional benefits and legal protections when they are deemed economically dependent on a company.
Expected to face legal challenges, the rule will take effect later this year and is likely to have a significant impact on various industries, particularly those heavily reliant on app-based services that heavily rely on contract workers.
While proponents of the rule argue that it will offer greater protections and benefits to workers, critics warn that it could reduce flexibility and result in lost income opportunities for individuals. Marc Freedman, Vice President at the US Chamber of Commerce, expressed concern over the potential negative impacts on the economy, stating that the new rule is likely to threaten the flexibility of individuals to work when and how they want.
Under the previous Trump administration, workers who own their businesses or can work for competing companies were often treated as contractors. The Biden administration argues that this approach violated wage laws and deviated from long-standing federal court decisions.
There is a growing consensus among workers’ groups that stricter standards are needed to prevent industries from misclassifying workers, hence the push for this new rule. However, business groups have raised concerns over increased labor costs in sectors such as trucking, retail, and manufacturing.
According to a recent survey by freelancing marketplace Upwork, over 40 percent of US workers, equivalent to more than 64 million people, worked as freelancers in the past year. This statistic highlights the significant number of individuals who could potentially be affected by the new rule.
The release of the final rule aims to strike a balance between worker protection and business interests. As the rule takes effect later this year, it will undoubtedly have far-reaching implications for independent contractors and the companies that rely on their services. Industry stakeholders will closely monitor developments, particularly any legal challenges to the rule, as it represents a significant shift in the classification of workers in the United States.
