Nearly every worker in the U.S. who is classified as an employee – save for workers in certain specialty industries and those who are subject to niche legal exceptions – benefits from workers’ compensation coverage. This is the case whether an individual is classified as a full-time, part-time or even a seasonal worker. However, workers who are classified as independent contractors generally don’t benefit from this coverage.
This is one of the many reasons why it’s so important that workers who function as employees are not misclassified as independent contractors. When misclassification occurs and a worker who should have workers’ comp protection isn’t afforded that safeguard, they may face significant medical debt and missed wages that should be rightfully covered. Thankfully, the Department of Labor (DOL) is trying to minimize the risk of this scenario playing out in the American workforce.
What is the new rule?
The new DOL final rule – which is set to take effect in March of this year – replaces its existing analysis that helps to determine whether a worker should rightfully be classified as an employee or independent contractor per related provisions of the Fair Labor Standards Act of 1938. The six factors that will guide this analysis moving forward include:
- A worker’s opportunity to make a profit or sustain a loss
- The temporary or permanent nature of the employee-worker relationship
- The worker’s investment and financial stake in the job at hand
- The amount of control that an employer is empowered to exercise over a worker
- The extent to which a worker is or is not essential to a company’s operations
- A worker’s skill and initiative
Labor Secretary Julie Su has summed up the motivation driving these changes as follows: “(The rule) will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly and that they receive the wages they’ve earned.”
Additionally – and arguably, just as importantly – this rule change will help to ensure that workers can pursue any and all workers’ compensation benefits to which they are entitled as well.