WASHINGTON—American Hotel & Lodging Association President and CEO Chip Rogers issued a statement after the Department of Labor released a new regulation that changes the way workers are classified as independent contractors or employees. The regulation, which is scheduled to take effect in March, will limit opportunities for individuals to work as independent contractors and hurt hotels’ ability to maintain operations.
“We are extraordinarily disappointed that the Labor Department dismissed the concerns of the thousands of small business owners AHLA represents and is insisting on making it harder for hotels to maintain operations in what is already one of the toughest labor markets in recent history,” said Rogers. “In the face of a nationwide shortage of workers, hoteliers need maximum flexibility to hire independent contractors, and contractors often prefer the flexibility of being classified this way. Despite this reality, the Labor Department is focused on making it harder—not easier—for hoteliers to hire the workers they need. AHLA is reviewing opportunities to legally challenge this regulation to restore certainty for America’s lodging industry.”
The Department of Labor’s new independent contractor regulation can complicate the process of classifying workers as independent contractors or employees and will create costly new uncertainties.
The regulation establishes a test where any of six different factors could be determinative of employee status, as opposed to DOL’s prior regulation, under which two core factors guided classification determinations.
Additionally, the regulation introduces a mandate forcing businesses to consider the “economic realities” of the relationship between a worker and a company and an undefined set of “additional factors” that must also be considered.
The regulation will increase liability for businesses and reduce opportunities for those interested in working as independent contractors, a status many workers prefer because it gives them flexibility and autonomy over their work. This will make it more costly and time-consuming for hoteliers to hire the independent contractors they need.
