Department of Labor to Crackdown on Misuse of “Independent Contractor”

There is new federal guidance on classifying workers as employees. The gist is that the Department of Labor is signaling that firms too often misclassify workers as independent contractors rather than employees. Why does this matter? The worker gets no minimum wage or overtime; has no right to form or join a union; has no employer-funded health insurance; has no worker’s compensation or unemployment. This tends to cut-out employer contributions to Social Security and FICA. In a nutshell, a worker’s investment doesn’t count for much (think about someone who uses his car to drive for Uber)—the keys are whether the work performed is integral to the firm’s business. Impacts: Uber and related, but also health care workers who increasingly perform “contract” work—and many others. The guidance letter is here:http://www.wsj.com/articles/labor-department-releases-guidance-on-classification-of-workers-1436954401