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Department of Labor rules on gig employees

The Department of Labor under President Trump overturned some Obama-era rules regarding companies’ use of contractors or freelancers by tech-based companies. There is now a recent clarification from the DOL’s Wage and Hourly Division reiterates earlier language about the Fair Standards and Labor Act (FLSA) in response to workers at a specific virtual marketplace company, but could also apply to the current issues involving Lyft or Uber as well as other digital platform marketplaces.

Businesses get a break

Many using technology to connect contractors with clients claim that contracting has been an important economic engine because it gives financial breaks to businesses, including:

  • No overtime needs to be paid
  • Workers are not entitled to health insurance or other benefits
  • No federal minimum wage (though local minimum wage is required)

Some workers doing better

According to economists, many workers in the digital economy are paid quite well as highly skilled workers. The employment platform Upwork determined that 31% of workers are earning $75,000 or more per year. The study also found that 73% of workers claimed they were making more money now than as a full-time employee. Moreover, employers who are looking for these highly specialized workers to handle their shifting needs are having a hard time filling positions. This is exacerbated by the current low unemployment numbers.

Contract versus full-time

Companies are becoming increasingly creative about attracting and maintaining desirable talent. This may lead to employers needing to adjust to their approach, whether it is moving towards using more contractors with higher pay or more full-time employees with more desirable benefits.

Knowledgeable employment law attorneys can evaluate a client’s business and how it relates to the emerging economic trends. They can ensure that contracts for either type of employee are fair but protect employers from unnecessary risk. They can also help with compliance issues as employment laws continue to change.