Lancer Insurance
Wednesday, November 29, 2023


In December, the American Society of Travel Advisors (ASTA) commented on the US Department of Labor’s (DOL) proposal for determining employee or independent contractor classification under the Fair Labor Standards Act (FLSA), urging the agency to withdraw the potential updated rule that would make it harder to classify workers as ICs. ASTA is a leading global advocate for travel advisors, the travel industry, and the traveling public.

According to the DOL, “the proposed rule would provide guidance on classifying workers and seeks to combat employee misclassification. Misclassification is a serious issue that denies workers’ rights and protections under federal labor standards, promotes wage theft, allows certain employers to gain an unfair advantage over law-abiding businesses, and hurts the economy at-large.”

This would rescind the so-called simpler Independent Contractor Rule of 2021, passed under the Trump administration, which the Biden administration attempted to block before it was enacted but was ultimately put into effect. The new proposed rule would be similar to the IC classification that was in place during the Obama administration. In short: the proposed rule would restore a “totality-of-the circumstances” assessment of the “economic reality test,” a more comprehensive review of factors in deciding whether a worker is truly an IC or employee, that generally has a bias toward employee classification.

However, not all workers and employers agree on employee status as a benefit. When the public comment period of the proposed ruling closed in December 2022, there were more than 55,000 comments, many in favor of the current test and the preference for IC status.

“Rather than trying to fix something that isn’t broken, the proposal should be withdrawn. For decades, the usage of independent contractors in our industry has grown steadily because it provides substantial benefits for both workers and agencies in situations where a traditional employment relationship doesn’t make sense,” said ASTA President & CEO Zane Kerby. “In our view, as compared with the interpretation currently in place, DOL’s proposal represents a clear, if modest, step backward that would increase uncertainty as to a worker’s status as either an employee or an independent contractor.”

The final ruling is expected to be announced in May 2023.

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