Employers need to revisit how they identify independent contractors in light of the U.S. Department of Labor's proposed rule on employee classification, which will rescind its 2021 rule. Although RIN 1235-AA43 is not yet finalized, the period for public comment ended on December 13, 2022.
The proposed rule would require organizations to analyze whether a worker is economically dependent on the employer for work or is in business for themselves—which can be a complicated determination. The distinction is important and affects both parties. It determines whether the company issues a form W-2 (employee) or 1099 (independent contractor) to the worker at the end of the year. The decision also, of course, affects taxation and benefits.
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