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In October, the U.S. Department of Labor proposed a new rule that would broaden the scope of workers required to be classified as employees rather than independent contractors. Under the new rule, any worker considered “economically dependent” on a company must be classified as an employee. This takes the following factors into consideration:
The proposed rule would generally increase costs for employers because any newly reclassified employees would need to be brought into the company’s benefit programs, and the company is then responsible for paying the employer’s share of payroll taxes on the employee’s wages.
For current independent contractors that are reclassified as employees, the effects are more of a mixed bag, with some of the following potential pros and cons:
After the conclusion of the comment period, the finalized rule is expected to be announced in 2023.
For more on this, see “Biden Labor Proposal Shakes Up Gig Economy That Relies on Contractors.”