The Department of Labor’s new rule on worker classification comes in on March 11 – experts share how to get ahead of the curve.
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The US Biden administration wants to rethink how employees and independent contractors are classified, with the aim of stopping people falling through the cracks and missing out on income.
But this brings added complexity for HR leaders in the US.
Here's everything they need to know ahead of the rule coming into place in mid-March!
In early January 2024, US President Joe Biden’s Department of Labor announced a revision to who classifies an employee (compared to an independent contractors) under the Fair Labor Standards Act.
Why does this matter? Well, a worker’s classification determines what types of benefits and protections they are entitled to – for instance, minimum wage, overtime pay, or social security protections.
So, any misclassification “deprives workers of basic rights and protections”, explained Acting Secretary of Labor, Julie Su.
According to data from the Economic Policy Institute, people who are misclassified as independent contractors earnt as much as a whopping $16,700 less a year in income and benefits than they would have as an employee.
Su continued: “This rule will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly and that they receive the wages they’ve earned.”
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