In January of this year, the U.S. Department of Labor (DOL) revised a 2021 rule that established factors to determine whether a worker is an employee or an independent contractor. The new rule went into effect in March.
Before the new rule was introduced, the previous rule (from 2021) emphasized two core factors when determining whether to classify an individual as an employee or independent contractor: (1) the nature and degree of the individual’s control over the work; and (2) the individual’s opportunity for profit or loss. The 2021 rule also proposed more factors that could be used for the classification determination, but stated that they were less probative than the two core factors. This clarification provided clarity under the Fair Labor Standards Act (FLSA), benefiting both businesses and workers.
The new 2024 rule replaces the previous two-factor test with a six-factor test to determine whether a worker is an employee or independent contractor. Those factors are (1) workers’ opportunity for profit or loss depending on managerial skill; (2) investments made by worker and employer, (3) degree of permanence of the work relationship; (4) nature and decree of businesses control over the worker; (5) extent to which work performed is an integral part of the potential employer’s business; and (6) whether the worker uses specialized skills in performing the work. The new rule also states that additional factors may be relevant if they in some way indicate whether the worker is in business for themselves, but it is not specified what those other factors are.
At this point, we're unable to ascertain how exactly the new rule would affect independent court interpreters, but we're monitoring the situation closely. So far, five lawsuits have been filed against the rule, alleging among other things that the DOL lacked the statutory authority to issue it and that the new guidelines will lead to increased confusion, litigation and costs, since it will be harder for businesses and workers to distinguish between independent contractors and employees. The lawsuits are:
The 2024 rule follows a troubling pattern of initiatives designed to protect misclassified workers with no consideration whatsoever to how it may adversely affect legitimate independent contractors. Another recent effort in this area was the PRO Act, a federal version of AB5, which passed in the U.S. House of Representatives in May 2020 and again in May 2021. Although it stalled in the Senate both times, it could be reintroduced and its threat remains.
We will keep you posted on the developments.
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