This legal alert was published on January 7th, 2021 by Randall Coffey in Kansas City, Benjamin Ebbink in Sacramento, Richard Meneghello in Portland, and John Polson in Irvine.

 

The Labor Department finalized a new rule today that aims to make it easier for businesses to classify workers as independent contractors – but the rule faces a very uncertain future given that the Biden administration will take the reins of the federal government before it is scheduled to take effect and the incoming administration has signaled its opposition to this change. Businesses that use independent contractors to carry out critical work roles – especially gig economy companies and those using gig-economy-like strategies for components of their workforce – have long awaited this rule in the hopes that it would lend certainty to modern business models and reduce litigation brought by workers claiming to be misclassified as employees. But celebrations need to be put on hold for now, as we expect President-elect Biden to at least temporarily stall implementation past its planned March 8 effective date while worker advocacy groups and state attorneys general line up to file legal challenges in the hopes of permanently killing the rule.

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