News

As the saying goes, March winds bring   . . . several new federal regulations for employers.

For 2024, businesses that employ 100 people in a location, in industries deemed “high hazard” such as construction, manufacturing, agriculture, and warehousing, will be required to report workplace injuries and illnesses electronically on Forms 300 and 301.  The yearly reports are to be filed to OSHA at its Injury Tracking Application (ITA) web site.  The deadline for filing was March 2, 2024.  OSHA believes that requiring these reports electronically will help better track patterns and also provide the public with more information about injuries related to employment.

Labor Department independent contractor classification rules

On Monday, March 11, 2024, the Department of Labor’s final rule regarding classifying workers became effective. The new rule is designed to provide guidance in classifying workers as independent contractors or employees.

There is no question that DOL prefers all workers to be deemed employees, primarily to benefit from overtime and minimum-wage requirements, and has made it clear that the new rule is designed to prevent “misclassification” of workers as independent contractors.  The Labor Department asserts that this rule will provide more guidance, but it is expected that it tightens the window for classifying workers as independent contractors.

The 2024 rule is said to revert to an “economic reality” test that courts have used, relying on the “totality of the circumstances” of the employment situation. Six factors must be considered:

1. Opportunity for profit or loss depending on managerial skill. Among the facts to be considered is whether the worker has the ability to negotiate the charge or rate of pay, decide to accept or decline a job and when it should be performed, engage in marketing the business, can make hiring decisions, and has the opportunity for profit or even loss.
2. Investments by the worker and the potential employer. The DOL asserts that if workers are required to provide their own tools or are subject to other costs, that is “not evidence of entrepreneurial investment and indicates employee status.” While DOL indicates “the worker’s investment should be considered . . . [it does] not have to be equal to the potential employer’s investment,” but instead is designed “to suggest the worker is operating independently, which would indicate independent contractor basis.”
3. Degree of permanence of the work relationship. The U.S. Labor Department says the worker should be considered an employee if “the work relationship is indefinite in duration, continuous, or exclusive of work for other employers.” In contrast, if “work relationship is definite in duration, non-exclusive, project based, or sporadic,” it is more likely the worker will be deemed an independent contractor.
4. Nature and degree of control. The DOL says that facts that should be considered here are whether the employer sets the worker’s schedule, supervises the work performance, limits the worker’s ability to work for others, reserves the right to discipline, controls the rates of the worker and the marketing of the services performed by the worker.  DOL also explains that whether an employer requires the worker to abide by the employer’s “own compliance methods, safety, quality control or contractual or customer service standard may be indicative of control. . .. More control by the potential employer favors employee status; more control by the worker favors independent contractor status.”
5. Extent to which the work performed is an integral part of the potential employer’s business. The Labor Department says the issue here is not “whether any individual worker in particular is an integral part of the business, but rather whether the function they perform is an integral part of the business.”  More integral favors employee status, less would favor “the worker being an independent contractor.”
6. Skill and initiative. The DOL says employee status is more likely if the worker does not use “specialized skills in performing the work” while bringing those skills to a job is indicative of independent contractor status.

The Labor Department makes clear that “additional factors” can be considered but not all the factors must be met nor will any one factor determine status.

Joint employer rule struck down

A new National Labor Relations Board rule that was to go into effect March 11 has been struck down by the U.S. District Court for the Eastern District of Texas.  The rule was set to allow employees to assert in labor negotiations that they had joint employers based on claims of control even if indirect, such as in franchising situations. At last report, the NLRB is expected to appeal to the Fifth Circuit Court of Appeals.

Increase coming in required salary for exempt employees

Finally, the DOL has indicated it plans to soon release its latest rule in redefining “white collar” exemption salary requirements, which allows an employer to classify an employee as “exempt” by meeting certain requirements of a narrow list of possible categories while meeting salary thresholds.  Recall that in 2016, the DOL issued a rule that was to have raised the salary requirement to $913 week, but the rule was struck down by another Texas federal district court.  However, the DOL did subsequently raise the salary level from $455 a week ($23,660 a year) to $684 a week or $35,568 a year.  This newest proposal would raise those numbers to $1,059 per week or $55,068 a year. The currently announced target date for release is April 2024.

The business and corporate law attorneys at Morton &  Gettys can help companies navigate these changes, as well as other employment law issues. Learn more about them here: https://mortongettys.com/practice-areas/business-corporate/

Beverly A. Carroll is an attorney with Morton & Gettys Law Firm in Rock Hill, SC. She is a Certified Specialist in Employment and Labor Law and also a business consultant who can help companies with a wide range of employment issues. She can be reached at (803) 366-33388 or bev.carroll@mortongettys.com.

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