Last week, the Department of Labor released a long-expected proposed rule that attempts to more clearly define the characteristic and status of independent contractors — a category that includes the construction industry and realtors. That designation of self-employed people goes far beyond the example of gig platform workers, like rideshare drivers. Although estimates vary, the numbers typically run into the tens of millions and include many in the commercial real estate industry.

The concern on the part of many is that the new rule, though a combination of suggestive wording and DOL interpretation, tries to implement a controversial strategy. President Biden, even during his campaign as well as during his tenure in office, and many Democrats and unions have championed a standard that would effectively eliminate much legitimate independent contractor business under the claim of protecting workers.

This ultimately is an outgrowth of California's AB5 bill from 2019 that went into effect 2020. That law, using the dated so-called ABC test from the 1930s, presumed that all people working were employees unless proven otherwise. Governing status was a three-part test in which the worker is free from the control of the hiring entity, the worker performs duties outside of the usual course of the hiring entity's business, and the worker is engaged in an independently established occupation or trade that is the same as the work being performed.

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