U.S. Labor Department Could Make It Easier to Treat Workers as Independent Contractors | Investing News
(Reuters) – The U.S. Department of Labor on Tuesday said it would soon propose a rule that could make it easier to classify workers as independent contractors rather than employees, a major issue for the “gig economy” and other industries that use contractors to contain costs.
During a phone call with reporters, senior department officials said the rule, if adopted, would provide courts with a “cleaner and easier-to-use process” than the complex multi-factor test currently applied in lawsuits alleging workers have been misclassified.
Independent contractors are not entitled to many of the legal protections afforded to employees, such as minimum wage and overtime pay. Employees can cost companies up to 40% more than contractors, according to several studies.
The labor department will publish a formal proposal by next week, the officials said, and adopt a final rule by the end of the year.
Under the proposal, a worker would be