A new proposal by the US Department of Labor gives guidance on how to classify employees. The goal of this is to avoid employee misclassification and ensure workers’ rights are protected. Temp employees are often classified as contractors, but this new proposal could change that.
Benefits for Temp Employees
In their statement Tuesday, the Department of Labor says misclassification “denies workers’ rights and protections under federal labor standards, promotes wage theft, allows certain employers to gain an unfair advantage over law-abiding businesses, and hurts the economy at-large.”
This proposal can change how hiring temp employees works. Contractors are not offered the same protections that employees are. Companies may have to provide temp employees with minimum wage, overtime, a portion of a worker’s Social Security taxes, and contributions to unemployment insurance.
A change in benefits depends on a change in classification. The guidelines are changing in a couple of ways, becoming more strict than the previous set. According to the New York Times, “The test considers factors such as how much control workers have over how they do their jobs and how much opportunity they have to increase their earnings by doing things like offering new services. Workers who have little of either are often considered employees.”
What it will not change
While this may change the classification of some temporary workers, the majority will continue to be classified as contractors. This proposal also only applies to rules enforced by the Department of Labor. This means that state, local, and other federal agencies like the IRS create their own employment criteria.
What this affects most is the gig economy, specifically companies like Uber and Lyft. In fact, the proposal comes in a long chain of legislation to prevent wage theft by these big companies. This isn’t expected to affect these companies yet but gives way to more strict regulations in the future.
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