US Labor Department Looking to Simplify Independent Contractor Language.

Recently, the U.S. Department of Labor brought forth a proposal to clarify the language that classifies workers as independent contractors rather than employees.

While the app based "gig" workers have been the catalyst for many states in seeking stricter rules for worker protection, the issue has broad reaching implications that extend far beyond, Uber, Postmates and the like.

The variables in use today have led to multiple lawsuits stating that workers have been misclassified. The rule, if adopted, seeks to provide courts with a "cleaner and easier to use process" than the multi-factor test currently being used.

While many proponents of the change argue that independent contractors are not entitled to many of the legal protections afforded to employees, such as minimum wage and overtime pay, others are concerned that a large sweeping rewrite could bring down the economies of several industries. Utilizing IC's has allowed companies to control labor cost and lower expenditures as much as 40%, according to several studies.

It is expected that the labor department will seek to finalize its proposal and will push to adopt a final set of rules by the end of 2020. At this time, the language is still vague in how and who will be considered an employee, going only so far as saying a worker would be considered an employee if they are "economically dependent" on the company for work. Officials say that workers who operate as an independent business and have "opportunities for profit or loss" would be classified as an independent contractor.

The most prominent opposition, Uber Technologies Inc, and other gig economy firms, are currently fighting lawsuits in California over a law adopted last year that changed the rules for companies making it far more difficult to utilize independent contractors. The lawsuits go so far as to claim the law is unconstitutional. Additionally, a large consortium of workers, companies and pro-business groups are seeking to educate voters on the potential fallout and urge California voters to approve a ballot referendum in the upcoming election that would specifically exempt app-based services from the scope of the California law. However, how this might affect industries outside of app-based businesses is yet to be seen.

The labor department also clarified that the upcoming proposal was not intended to override stricter state laws. However, it would in all likelihood make it more difficult for workers to bring forth nationwide class-action lawsuits with claims that they had been misclassified.

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