On Jan. 9, the Department of Labor released a new regulation that radically changes the way workers are classified as independent contractors or employees. The regulation, which is scheduled to take effect March 11, will limit opportunities for individuals to work as independent contractors and hurt hotels’ ability to maintain operations.
In the face of a nationwide shortage of workers, hoteliers need maximum flexibility to hire independent contractors, and contractors often prefer the flexibility of being classified this way. Despite this reality, the Labor Department is focused on making it harder – not easier – for hoteliers to hire the workers they need. The regulation vastly complicates the process for classifying workers as independent contractors or employees and will create costly new uncertainties. It invites confusion and litigation by establishing a test where any of six different factors could be determinative of employee status, as opposed to DOL’s prior regulation, under which two core factors guided classification determinations.