In an effort to address the issue of self-employment misclassification in the United States, The Department of Labor will implement a new rule starting March 11, 2024. This measure seeks to benefit workers affected by misclassification, a phenomenon that especially impacts low-wage industries, such as construction, transportation and home health.
According to data from the Department of Labor45 percent of the workforce in the United States, equivalent to 72,000,000 people, are independent workers. Of these, 30,000,000 work full time. However, many of them are misclassified as employees, resulting in lower wages and lack of access to benefits such as unemployment insurance.
The new standard will use the “economic realities test” to classify self-employed workers. Six factors will be analyzed, including the opportunity for profit or loss based on management skills, the investments of both the worker and the employer, the permanence of the employment relationship, the level of control of the employer, whether the work is an integral part of the business and the skill and initiative of the worker.
The labor standard in the United States is a reinstatement of measures in force until 2021
This rule, which goes into effect in March, It is a reinstatement of the previous rule that existed before a change in 2021. That year's change was deemed inconsistent with the law and is therefore being reversed to address concerns related to worker classification.
The rule primarily affects lower-wage workers, applying to those who earn less than US$7.25 per hour or US$10.88 per hour in overtime. To benefit from this measure, workers must be employees covered by the law and have received a lower salary than due to misclassification.
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If a worker believes they have been misclassified, they are urged to gather information about the company and their salary., and file a complaint online or by phone with the Department of Labor. The new rule does not represent a radical change, but rather a return to a previous system that is considered more consistent with the legislation and that seeks to protect the rights and wages of affected workers. It is important to note that independent workers who prefer to maintain their status will be able to do so under this new regulation.
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