U.S. Department of Labor has changed the rules when it comes to 1099 (Independent Contractors) and whether they are considered employees for the purpose of Workers Compensation. These changes will take effect 3/11/2024. Here are the six factors that will guide the decision:
1. Any opportunity for profit or loss a worker may have.
a. Whether the worker determines or can meaningfully negotiate the charge or pay for the work provided.
b. Whether the worker accepts or declines jobs or chooses the order and/or time in which the jobs are performed.
c. Whether the worker engages in marketing, advertising, or other efforts to expand their business or secure more work.
d. Whether the worker makes decisions to hire others, purchase materials and equipment, and/or rent space.
· If a worker has no opportunity for a profit or loss, then this factor suggests that the worker is an employee.
2. The financial stake and nature of any resources a worker has invested in the work.
3. The degree of permanence of the work relationship.
a. When the work relationship is indefinite in duration, continuous, or exclusive of work for other employers.
4. The degree of control an employer has over the person’s work.
a. Sets the worker's schedule.
b. Supervises the performance of the work
c. Explicitly limits the worker's ability to work for others
d. Uses technological means to supervise the performance of the work (such as by means of a device or electronically)
e. Reserves the right to supervise or discipline workers
5. Whether the work the person does is essential to the employer’s business.
a. This factor does not depend on whether any individual worker in particular is an integral part of the business, but rather whether the function they perform is an integral part of the business.
6. A factor regarding the worker’s skill and initiative.
a. The worker does not use specialized skills in performing the work or where the worker is dependent on training from the potential employer to perform the work
If you employ any 1099’s and you don’t carry workers compensation insurance, you need to reach out to your insurance agent to talk about whether any of the above impact you. When it comes to auctioneers, 1, 3, 4, and 5 may be what changes the relationship between you and that IC to employer/employee when it comes to workers compensation. For more information, here is a link to the FAQ page.
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