2024 Updates to Independent Contractors & Joint Employer Rules - Netchex

New year, new regulations—commonplace for businesses and HR departments. Two new labor rules of interest to HR professionals are set to take effect in the early  months of 2024.

NLRB Joint Employer Rule

In October 2023, the National Labor Relations Board issued its most recent standard for determining when two (or more) entities are considered “joint employers” under the National Labor Relations Act

On the whole, the new rule lowers the bar to establish joint employer status. Now, two (or more) entities may be considered joint employers if each entity shares or codetermines one or more of the employees’ essential terms and conditions of employment. These are defined as:

  • Wages, benefits, and other compensation
  • Hours of work and scheduling
  • The assignment of duties to be performed
  • The supervision of the performance of duties
  • Work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline
  • The tenure of employment, including hiring and discharge
  • Working conditions related to the safety and health of employees

The 2023 Rule supplants the Board’s previous joint employer rule issued in 2020 and expands the landscape where joint employer status can be established. After the required review period, the new will take effect on February 26, 2024. 

Employers should immediately take steps to review and, if needed, update contracts with third-party vendors or staffing agencies. If employers take action early enough, they can avoid unknowingly engaging in unfair labor practices as well as the resulting consequences.

DOL Independent Contractor Rule

In early January 2024, the U.S. Department of Labor announced its final rule revising its interpretation of the Fair Labor Standards Act’s classification provision to more clearly determine whether a worker may be considered an independent contractor.

READ: Contractors & Exempt Employees: How Worker Classifications Impact Payroll and Taxes

The final rule mostly follows the agency’s initial proposal revealed back in October 2023—retaining the multifactor, “totality-of-the-circumstances” framework for analyzing independent contractors’ status included in that proposal. 

Under this framework, DOL will consider six non-exhaustive factors when examining the relationship between a worker and a potential employer:

  • Worker’s opportunity for profit or loss
  • Investments made by the worker and the employer
  • Degree of permanence of the work relationship
  • Nature and degree of control over performance of the work
  • Extent to which the work performed is an integral part of the employer’s business
  • Use of the worker’s skill and initiative

The DOL said the final rule would ensure a level playing field for workers, particularly vulnerable workers who are misclassified and lose out on minimum wage, overtime pay, and other protections under the FLSA.

This new rule effectively rescinds the Trump administration’s 2021 independent contractor final rule. Additionally, the final rule does not adopt an “ABC” test, a framework that jurisdictions including California have adopted in order to determine independent contractor status.

Read more about recent HR rules, policies, and legislation:

Discover how Netchex can help your company stay in compliance and improve your HR processes:

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