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Updates from the Office of the Commissioner Representing Employers |
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Welcome to the April issue of Texas Business Today!
In recognition of National Internship Awareness Month, I recently welcomed employers and students to our first Texas Interns Unite (TIU) event of the year, which connects and challenges employers to increase and promote internships for students in Texas. As Texas continues to benefit from the largest monthly job add in over a year, now is the time to plan how you will build a dedicated pipeline of qualified workers for your expanding business. Internships are a great place to start.
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Additionally, the?Texas Internship Challenge portal?is a no-cost site where employers can post internships and where students can search and apply for them. The site offers paid and academic credit internship opportunities around the state. The Texas Internship Challenge was developed as a result of a recommendation from Texas Workforce Commission (TWC), the Texas Education Agency (TEA), and Texas Higher Education Coordinating Board (THECB) to Governor Greg Abbott as part of the Tri-Agency Initiative.?
Employers interested in providing paid internships for undergraduate Texas college and university students can be reimbursed through TXWORKS.
The Texas Internship Challenge is a win-win for students and employers. Through an internship, students will benefit from mentoring, career guidance, identification of marketable skills, and can learn firsthand about high-demand occupations. Employers will benefit by leveraging the developing skill sets and perspectives of students, highlighting careers in their industries for a future workforce, and exploring candidates for fulltime recruitment.
Businesses large and small can gain a competitive advantage by taking the Texas Internship Challenge. Post your opportunities here: www.TxInternshipChallenge.com.
Let?s keep Texas the best place in the nation to live, work, and do business!
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Texas Business Minute
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Texas Conference for Employers
Join us in Beaumont on Friday, April 19, 2024
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New Independent Contractor Rule from the U.S. Department of Labor
By: Mario Hernandez
Legal Counsel to Commissioner Joe Esparza
Worker classification is an important issue for employers. Some employers might think that properly classifying a worker as an independent contractor is solely a matter of agreement or convenience. However, there are actually tests that regulating agencies will use to determine whether a worker has been properly classified.
One such test is the ?economic realities test? used by the U.S. Department of Labor (DOL), and on March 11, 2024 a new rule went into effect regarding how DOL will analyze worker classification issues. Per DOL?s website, the factors of the final rule are the following:
?(1) opportunity for profit or loss depending on managerial skill;
(2) investments by the worker and the potential employer;
(3) degree of permanence of the work relationship;
(4) nature and degree of control;
(5) extent to which the work performed is an integral part of the potential employer?s business; and
(6) skill and initiative.??
(See: https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking/faqs#s7)
It should also be noted that in addition to the factors above, other factors could also be considered in the classification analysis if they demonstrate that the worker is truly in business for themself, as opposed to being an employee of an employer.
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What?s Changed?
Prior to the new rule, DOL?s analysis of worker classification revolved around two core factors: the nature and degree of control over the work, and the individual?s opportunity for profit and loss. Other factors would be considered if the two core factors were not dispositive of the worker?s classification.
With DOL?s new rule, the focus has shifted away from labeling specific factors as core. Instead, the new rule adopts a totality-of-the-circumstances approach, with no individual factor being assigned a predetermined weight.
For more information on what has changed under the new rule, please visit the following link: https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking/faqs#s10.
Why is Worker Classification Important?
Improperly classifying workers can have costly consequences for employers. For instance, worker misclassification could result in penalties for the employer, back taxes, and back wages owed.
DOL has a news release page about misclassified workers, which you can visit at the following link: https://www.dol.gov/newsroom/releases?agency=57&state=All&topic=18210&year=all. ?
Moreover, DOL is not the only regulating agency that investigates worker classification issues. Other agencies, such as the Texas Workforce Commission and the Internal Revenue Service, have their own worker classification tests and perform investigations to ensure workers are properly classified. For more information on various independent contractor tests, please visit the following link in our online Texas Guidebook for Employers: https://efte.twc.texas.gov/ics_contract_labor.html.
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Conclusion
It should be noted that this article is not an exhaustive review of the topics discussed. It is important for employers to familiarize themselves with DOL?s new independent contractor rule to help avoid worker misclassification. In fact, DOL has an FAQ page with a breakdown of the new rule, which you can visit at the following link: https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking/faqs. By staying up to date with developments regarding independent contractor tests and rules, employers will be in a better position to avoid misclassifying workers.?
Additional Links
DOL webpage: Final Rule: Employee or Independent Contractor Classification Under the Fair Labor Standards Act, RIN 1235-AA43: https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking
DOL webpage: Misclassification of Employees as Independent Contractors Under the Fair Labor Standards Act: https://www.dol.gov/agencies/whd/flsa/misclassification
Federal Register: Employee or Independent Contractor Classification Under the
Fair Labor Standards Act:? https://www.federalregister.gov/documents/2024/01/10/2024-00067/employee-or-independent-contractor-classification-under-the-fair-labor-standards-act
Texas Business Today is provided to employers free of charge
Texas Business Today is a monthly update devoted to a variety of topics of interest to Texas employers. The views and analyses presented herein do not necessarily represent the policies or the endorsement of the Texas Workforce Commission. Articles containing legal analyses or opinions are intended only as a discussion and overview of the topics presented. Such articles are not intended to be comprehensive legal analyses of every aspect of the topics discussed. Due to the general nature of the discussions provided, this information may not apply in each and every fact situation and should not be acted upon without specific legal advice based on the facts in a particular case.
Connect with the Office of the Commissioner Representing Employers
Email: [email protected]
Mail: Commissioner Representing Employers
101 E. 15th St., Rm 630
Austin, TX 78778
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