In January 2024, the U.S. Department of Labor released a final rule that will change the
way workers are classified as independent contractors or employees. The change, set to take effect today, March 11, will make it much harder for workers to qualify as independent contractors.
The rule will set up a subjective, six-factor test
for determining worker status, and create an undefined set of “additional factors” that might also be considered. This is a significant departure from the current test that relies on two core factors and has created a predictable system that allows workers
to choose the style of work that suits them best.
The new standard will invite confusion and unpredictability in the workplace, since worker status will largely depend on who is conducting the test and what factors they view as important.
We believe it will ultimately force millions of independent contractors to give up that status and become company employees. This will limit opportunities for people to work as independent contractors and hurt hotels’ ability to maintain operations.
The American Hotel & Lodging Association is considering a range of potential next steps against this rule, including possible litigation and the National Restaurant Association is urging Congress to authorize a CRA of
the new rule. In the meantime, operators should review their use of independent contractors and consult with an attorney proactively to insure compliance.
Click here to view AHLA’s resources
on the independent contractor rule. Click here to
view a detailed memo on the rule.
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