Advocacy News – Jan. 30, 2024
On the heels of the U.S. Department of Labor’s (DOL) new independent contractor rule, two federal court challenges have been filed. The plaintiffs are seeking speedy resolution, hoping the court will stop the rule from taking effect March 11.
Why it matters: The DOL’s rule redefines what workers can be classified as “independent contractors” under the Fair Labor Standards Act (FLSA). The new rule restores the standard that existed prior to 2021 and requires companies to weigh a variety of economic factors together to determine whether a worker is an employee or an independent contractor. This change could spark an increase in misclassification lawsuits and make it more difficult for businesses to hire independent contractors and gig workers. Employers who misclassify workers can be liable for unpaid overtime going back up to three years, double damages, and attorneys’ fees and costs.
What’s next: If either of these lawsuits are successful, the DOL’s new rule may never go into effect. Only time will tell. In the meantime, businesses should continue to consult with legal counsel to determine whether existing independent contractors are properly classified under the new rule.
Go deeper: Read a full legal analysis from our friends at Varnum Law.