For companies classifying service providers as “independent contractors” rather than employees, the U.S. Department of Labor (DOL) has just issued a warning: In its view, “most” American workers are really employees.
In September 2020, the (DOL) published a proposed rule addressing how to determine whether a worker is an employee under the Fair Labor Standards Act or an independent contractor. Much like California Assembly Bill 5 (AB5) that was passed in 2019, companies must apply an “economic realities” test to determine whether a worker is an employee or an independent contractor. Certain key factors should be considered in light of the ultimate determination of whether the worker is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is its employee).
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