Nov. 23, 2022
Biden Administration's Proposed New Independent-Contractor Test Can Impact Your Company's Bottom Line
A SPECIAL REPORT featuring analysis from Tripp Scott's Paul O. Lopez and Brittany Hynes
Companies routinely use independent contractors for special projects and isolated assignments as a way to cut down on the normal costs connected to hiring full time W-2 employees. However, companies often misunderstand what a true independent contractor is versus a W-2 employee.
This can place a bullseye squarely on a company’s back either through a Department of Labor (“DOL”) audit of its classification of laborers or through federal lawsuits filed under the Fair Labor Standards Act (“FLSA”) for alleged unpaid wages and overtime owed to misclassified independent contractors who are alleged to be employees.
The Biden administration’s Labor Department is looking to make it tougher to classify a worker as an independent contractor by modifying the current U.S. Department of Labor’s Wage and Hour Division (“WHD”) regulations “to be more consistent with judicial precedent and the act’s text and purpose.” Employers need to be aware of these changes and the potential impact it will have on their labor costs if fully implemented.