The U.S. Labor Department has withdrawn its “Independent Contractor Rule,” which made it easier for companies to classify workers as independent contractors.
“By withdrawing the Independent Contractor Rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect,” said U.S. Secretary of Labor Marty Walsh. “Legitimate business owners play an important role in our economy but, too often, workers lose important wage and related protections when employers misclassify them as independent contractors. We remain committed to ensuring that employees are recognized clearly and correctly when they are, in fact, employees so that they receive the protections the Fair Labor Standards Act provides.”
Erasure of this rule is made with the intent to prevent an overuse of the independent worker classification by companies who would benefit from denying employment benefits to its workers.
Worker protection is paramount, but there is some concern that the removal of this rule may make it difficult in the future for microentrepreneurs, like those in the direct selling industry, to continue to work in a flexible environment.