As we step into 2023, employers face a dynamic landscape of employment law changes. Staying informed is crucial to ensure compliance and mitigate risks. Let’s explore two critical topics:
1. Classification of Workers: Employee or Independent Contractor
The U.S. Department of Labor (DOL) has proposed a new rule regarding independent contractor status. The existing 2021 Independent Contractor Rule emphasized control and profit factors for classification. However, the proposed six-factor test considers additional aspects:
Opportunity for Profit or Loss: Does the worker’s managerial skill impact their earnings?
Investments by Worker and Employer: Who bears the financial burden?
Degree of Permanence: Is the work relationship temporary or ongoing?
Nature and Degree of Control: How much control does the employer exert?
Integral Work: Is the work essential to the employer’s business?
Skill and Initiative: Does the worker’s expertise matter?
The practical result? More workers may be classified as employees, potentially expanding eligibility for overtime pay. Employers must also consider state-specific standards.
2. The Future of Noncompetes
The Federal Trade Commission (FTC) aims to restrict noncompetition provisions. The proposed rule prohibits overly broad agreements that effectively ban working in the same field post-employment. It also targets clauses imposing unreasonable training costs upon termination. If implemented, this rule would bar noncompete agreements with employees and independent contractors, nullifying existing ones within six months.
Action Steps for Employers:
Stay updated on DOL’s final rule on independent contractor classification.
Review existing noncompete agreements and assess compliance with the proposed FTC rule.
Remember, proactive adaptation to these changes ensures a legally sound workplace. Consult legal counsel and keep your policies up-to-date.
Disclaimer: This blog post provides general information and should not be construed as legal advice. Always consult with legal professionals for specific guidance.
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