Labor Department Issues New Contractor Rule

A final rule published on Jan. 9 by the Department of Labor outlines new guidelines to be used when determining if independent contractors should be classified as employees. The rule, which was first proposed in 2022, restores past federal regulations regarding independent contractors.

Drawing criticism from business groups, the rule describes independent contractors as workers who, “as a matter of economic reality, are not economically dependent on an employer for work and are in business for themselves.” The new guidelines go into effect on March 11 and may have a large cost impact on U.S. trucking and other industries that have small independent business owners contracting out their services, such as housekeeping cleaners, janitors, security guards, home health aides, and construction workers.

“More than 350,000 truckers choose to work as independent contractors because of the economic opportunity it creates and the flexibility it provides, enabling them to run their own business and choose their own hours and routes,” said American Trucking Association president and CEO Chris Spear in a press statement.

The new rule uses six factors to determine whether a worker is an employee or a contractor, as outlined by the Society of Human Resources Management (SHRM):

• The degree to which the employer controls how the work is done;
• The worker’s opportunity for profit or loss;
• The amount of skill and initiative required for the work;
• The degree of permanence of the working relationship;
• The worker’s investment in equipment or materials required for the task; and
• The extent to which the service rendered is an integral part of the employer’s business.

For more information, visit www.ngfa.org.