A new Department of Labor (DOL) Independent Contractor (IC) Rule went into effect on March 11, 2024. The new IC Standard is now the guide to determine whether a worker is an employee of a company or is self-employed and therefore “independent” from the company. If the worker is independent, then the relationship with the company is governed by the contract for services and the worker does not have the benefits or protections that attach to being an employee.
Although the IC Rule is governed by the DOL, a confusing aspect of assessing independent contractors is that the National Labor Relations Board (NLRB) also created an IC standard. The NLRB did this in June 2023, with the simple act of issuing a decision that addresses that issue. The DOL, however, is constrained by procedures that made revising the IC Rule a slower process. DOL began the revision last summer and published the final rule in January 2024.
Unfortunately, the NLRB revised IC standard and the new DOL IC Rule are not the same. The NLRB IC Standard will be used to determine if a worker is an independent contractor for purposes of the National Labor Relations Act (NLRA), which addresses whether a worker is part of a voting or bargaining group and is covered by the NLRA. Whereas the DOL IC Rule applies to all employers, not just those who are dealing with a union organizing or voting situation or working under a collective bargaining agreement.
The DOL IC Rule sets out a six-factor assessment to determine if a worker is an independent contractor. The challenge with the factors is that they are not definitive, and the “weight” of each factor is not specified. Instead, the assessment is made based on the “totality of the circumstances”, which means that the decision a company makes about whether a worker is an independent contractor is subject to different interpretations of the factors. The DOL will issue guidance to clarify how the factors should be applied.
The six factors to assess whether a worker is truly an independent contractor are as follows:
- The degree to which the employer controls how the work is performed.
- The worker’s opportunity to make a profit or loss from the job.
- The amount of skill and initiative required for the work.
- The degree of permanence of the working relationship.
- The worker’s investment in equipment or materials required for the task.
- The extent to which the service rendered is an integral part of the employer’s business.
While print service providers (PSPs) typically do not encounter situations in which it is difficult to determine if a worker is an independent contractor or an employee, there are some circumstances where this issue may arise. These may occur when a worker has been contracted for a long-term engagement that requires specific expertise, such as graphic design assistance or computer systems and technical services. In addition to these situations, other scenarios that may require an IC Rule assessment are when a former employee comes back to fill in for someone out on medical leave for a specific period of time, a worker is brought in to perform maintenance and repair on production equipment, or a large rollout that requires additional workers for kitting for a limited time.
As with all new rules, there will be many questions and situations that require clarification. If significant interpretations occur, we will update you on them. In the interim, please feel free to contact Adriane Harrison at aharrison@printing.org with any questions you may have about how the rule applies to any of your employment scenarios.
In this article Adriane Harrison, Vice President of Human Relations Consulting, PRINTING United Alliance, addresses the new Department of Labor Independent Contractor Rule. More information about labor and employment laws and regulations can be found at the Center for Human Resources Support or reach out to Adriane directly if you have additional questions specific to how these issues may affect your business at: aharrison@printing.org.
To become a member of the Alliance and learn more about how our subject matter experts can assist your company with services and resources such as those mentioned in this article, please contact the Alliance membership team: 888-385-3588 / membership@printing.org.