The new, stricter worker classification rules published by the U.S. Department of Labor (as reported in Staffing Today Jan. 9, 2024) point up the importance of clients using staffing firms that operate as employers and that classify their temporary workers as W-2 employees. The new rules increase the risk to clients that use app-based job platforms, especially in the health care and industrial sectors, and that classify workers as independent contractors.
Some job platforms may legitimately claim that the workers placed through their systems are independent contractors with respect to the platform, but staffing firm clients generally can’t make the same claim because they exercise supervision and control over the workers. Under the new classification rules, more clients could face claims that they employ the workers and therefore owe payroll taxes, overtime wages, and other employment-related costs and benefits.
The new rules embrace traditional principles for classifying workers that favor W-2 status and could lead to reclassification of many “gig” workers currently classified as independent contractors, including those working through app-based job platforms. Although the rules are expected to be challenged in court, they may prompt federal regulators to increase their scrutiny of those platforms, which could discourage their use. ASA and its members have been working with DOL and state regulators to help ensure that workers are properly classified.
ASA has published resources, updated in light of the new DOL rules, to help members that supply health care and industrial employees educate their clients on the advantages of using staffing firms that classify their workers as W-2 employees—which the overwhelming majority of firms are—and the legal risks of using workers classified as independent contractors. Firms may also find these general tips on independent contractor compliance helpful.
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