Baltimore Workers’ Compensation Lawyers: New Guidelines Address Misclassification of Workers

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Debate over whether certain workers qualify as employees or independent contractors is nothing new. Employers and workers alike have struggled with this issue for decades. But with a flood of new sharing-economy jobs entering the market, the need for better clarification has never been more urgent.

The Department of Labor has issued new guidance that has the potential to create shockwaves for a number of sharing-economy companies. The goal is to bring some much-needed clarification to as to who qualifies as an employee versus an independent contractor. The move follows a wave of lawsuits against a number of start-ups including ride-sharing firms Uber and Lyft, and other gig businesses like Handy and Crowdflower.

The Department of Labor released the new directive in response to growing criticism from labor unions and activists who claim that companies like Uber exploit workers for their own benefit. Many argue that by misclassifying workers as independent contractors rather than employees, companies can cut costs and avoid certain labor laws. Unlike employees, independent contractors are not entitled to certain protections such as minimum wage, overtime compensation, unemployment insurance and Workers’ Compensation. Rampant misclassification also creates an uneven playing field for those employers who properly classify their workers.

In contrast with the old guidelines that generally focus on how much control the employer has over how the work is performed, the new directive emphasizes the economic dependence the worker has on his or her employer. Put simply, a worker who is economically dependent on his employer should be treated as an employee; a worker who is truly in business for himself is an independent contractor. In order to make this distinction, employers and courts consider a number of so-called economic realities factors. These factors will be utilized on a case-by-case basis and generally include:

  • The extent to which the work performed is an integral part of the employer’s business
  • The extent to which the worker’s managerial skill can affect his or her profit and loss
  • The worker’s relative investment as compared to the employer’s investment
  • The amount of special skill and initiative required for work performance
  • The permanency of the relationship between the worker and employer
  • The degree of control exercised or retained by the employer

Not one of the above factors stands alone as determinative. Rather, courts will consider how each factor lends itself to the determination of whether the worker is really in business for himself, or instead, is economically dependent on the employer. The potential impact of the new guidelines is huge. The Department of Labor anticipates that as many as five million currently exempt workers will change status, thereby becoming entitled to protections formerly unavailable to them.

Baltimore Workers’ Compensation Lawyers Fight Against Employers Who Misclassify Their Workers

If you have been denied Workers’ Compensation or other benefits because your employer wrongfully classified you as an independent contractor, we can help. For more than 30 years the Baltimore Workers’ Compensation lawyers at LeViness, Tolzman & Hamilton have been fighting for workers’ rights to be fairly compensated after suffering a workplace injury or illness. To schedule a free and confidential consultation with one of our qualified Baltimore Workers’ Compensation lawyers, call 844-556-4LAW (4529) today or contact us online.