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NAM: New Labor Rule Will Cost Employers, Restrict Worker Freedoms

A new Biden administration rule will force companies to reclassify potentially millions of workers, creating difficulties for manufacturing employers and employees alike, the NAM says.

What’s going on: In a move that “is widely expected to increase labor costs for industries that rely on contract labor or freelancers, such as trucking, manufacturing, health care and app-based ‘gig’ services,” the Department of Labor “will require that workers be considered employees rather than contractors when they are ‘economically dependent’ on a company,” Reuters (subscription) reports.

  • The new rule—which is set to take effect March 11—replaces one established by the previous administration, which had a much broader definition of what constituted contract labor.  

Employee or contractor? In determining a worker’s status, the department will weigh six factors, including “a worker’s opportunity for profit or loss, the degree of control wielded by a company over a worker and whether the work is an integral part of the company’s business,” according to Reuters.  

Why it’s important: The new regulation “could severely hamper worker flexibility with its ambiguous and cumbersome six-factor test,” said NAM Vice President of Domestic Policy Brandon Farris.

  • “Manufacturers across the country rely on the ability to utilize independent contractors, and workers rely on the flexibility to work for whomever they want, whenever they want. This rule will restrict those freedoms.” 
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