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The US Department of Labor proposed a bill that would help employers determine when workers should be classified as independent contractors instead of employees.

About The Proposed Legislation

The bill, known as RIN 1235-AA43, would establish rules that define which workers should be classified as contractors. It lists two “core factors” that would be used to make this determination. They are:

• How much control a person has over the nature and degree of the work they do.
• How much opportunity a person has to either experience profit or loss based on initiative and/or investment.

It also creates secondary factors that can be used to help even more. They include:

• The level of skill that is required for the work a person is doing.
• Whether the worker has a permanent or ongoing relationship with the organization for which they are working.
• Whether the work is part of an integrated unit of production.

People who are deemed employees have various protections under the Fair Labor Standards Act (FLSA). The FLSA states that employees are entitled to specific benefits, such as a minimum wage and the ability to receive additional pay for overtime work. These benefits are not granted to independent contractors.

Status Of The Bill

The proposed bill will be reviewed by the Office of Management and Budget. Public forums were held on June 24 and June 29 to give employers and others a chance to learn more before it went through the final steps of the vetting process. While a similar bill was not approved, legislators hope this one will be signed into law to help organizations make important classifications.

What Employers Should Know

Employers should be aware of this proposed law and know that, if passed, it would be used to clarify whether people who do work on their behalf must be identified as contractors or employees. In turn, this decision will affect various aspects of the person’s work-related details, such as their level of pay, ability to set their own hours and benefits.

Screening Contractors And Applicants

When you bring on employees, contractors or volunteers, these individuals will represent your organization. That makes it essential for hiring managers to establish if the person is qualified and eligible for the position or if they might be considered a security risk. Comprehensive background checks can help you make informed decisions, create safe workplaces and conduct due diligence.

These reports can contain a wide variety of information about the person you screened, including if they have any convictions of which you should be aware. Allowing someone to represent your organization without first screening them could lead to claims of negligence and other issues. A background check is like a small but effective insurance policy that helps protect your business, staff and the people you serve.

Need Background Checks?

If your organization needs background checks, please contact us. Our experienced team can help you customize screening packages for any position based on your specific needs, industry regulations and applicable laws. We are available to assist you Monday through Friday from 5am to 6pm PT.