The US Department of Labor on Tuesday issued a final rule that will force companies to treat some workers as employees rather than less expensive independent contractors, in a move that has riled business groups and will likely prompt legal challenges.
The rule is widely expected to increase labour costs for industries that rely on contract labour or freelancers, such as trucking, manufacturing, healthcare and app-based "gig" services.
Most federal and state labour laws, such as those requiring a minimum wage and overtime pay, apply only to a company's employees. Studies suggest that employees can cost companies up to 30% more than independent contractors.
The rule will require that workers be considered employees rather than contractors when they are "economically dependent" on a company. It does not go as far as wage laws in California and other states that place even greater limitations on independent contracting.
It replaces a regulation by Republican former President Donald Trump's administration that had made it easier to classify workers as independent contractors. The new rule is likely to be challenged in court by trade groups and businesses.
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