Advocacy News – Feb. 29, 2024
With the U.S. Department of Labor’s (DOL) new rules redefining which workers can be classified as “independent contractors” under the Fair Labor Standards Act (FLSA) going into effect March 11, the Michigan House Labor Committee heard testimony Thursday on whether the state should follow suit — or go further.
Why it matters: The new federal rules require companies to weigh a variety of economic factors together to determine whether a worker is an employee or an independent contractor. The change could spark an increase in misclassification lawsuits and make it more difficult for businesses to hire independent contractors and gig workers. Some state lawmakers don’t believe the federal rules go far enough, and would like to see the state adopt a California-style “ABC test” (HB 4390), which “presumes” workers are employees, making it very difficult to classify workers as an independent contractors.
What’s next: Based on committee testimony from Sean Eagan, Deputy Director of the MI Department of Labor & Economic Opportunity Department, we expect the Department to push for legislation to mirror the new federal rules — applying it to the unemployment and workers’ compensation, wage and hour and MIOSHA systems.
Our thought bubble: We believe it’s wise to proceed with caution because the new rules have been challenged in federal court and there is a chance they could be struck down. What’s more concerning is that activist groups, like the National Employment Law Project (NELP), continue to push for more sweeping and aggressive changes, such as the ABC Test and House Bill 4390. We strongly oppose those efforts and are leading a coalition on the issue.
Have questions or comments? Contact Wendy Block at wblock@michamber.com.