Employer misclassification of workers as independent contractors – rather than as employees – is a common phenomenon in the U.S. Contractors cost employers far less than employees, as under federal law independent contractors are not entitled to certain guaranteed wages and other benefits.
Some estimates indicate that 30% or more of employers misclassify their workers as independent contractors. As the gig economy has grown exponentially in recent years, worker misclassification is depriving an increasing swath of the workforce of protections they rightly deserve.
Fortunately, the current administration is making worker protection a priority.
In January of this year, the previous administration created a rule – known informally as the independent contractor rule – which would have made it more difficult for gig workers to force their employers to classify them s employees. By continuing to be classified as independent contractors, the gig workers would not have been entitled to protections under the Fair Labor Standards Act, such as the right to minimum wage and overtime pay.
This rule was set to take effect in March, but the incoming administration tabled it for review. The current president ultimately decided to block the rule,and it was formerly withdrawn on May 6. Labor Secretary Marty Walsh praised the move as an important step to “preserve essential worker rights.”
The distinction between contractor and employee is not always cut and dried. The nullification of the independent contractor rule has positive implications for workers across the gig economy, and gives them solid footing to seek employee status under the law.