Capitol Hill

Independent contractor or employee?

In the current economy where workloads and jobs are fluid, independent contractors have become common in the construction industry. However, federal regulators and others believe some employers are misclassifying employees as independent contractors.

To combat misclassification by employers, the Department of Labor's (DOL's) Wage and Hour Division released an Administrator's Interpretation (AI) to help establish who is considered an employee versus independent contractor. This interpretation of existing law is an effort to protect workers who do not enjoy the same benefits of employees, increase revenues for the government through employment taxes that often are lost through independent contractor arrangements and prevent an uneven playing field for employers who properly classify employees.

What is an AI?

An AI is not a change in policy; therefore, it is not subject to the notice and comment process required for new regulations. It does not have the force of law, but courts look favorably upon interpretations such as this AI by federal agencies.