AH February 2024
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FEBRUARY 2024 ASIAN HOSPITALITY
he U.S. Department of Labor’s
definition of who qualifies as
independent contractors, due to
take effect in March, is meant to ensure
that workers are treated fairly, according
to the department. However, the
American Hotel & Lodging Association
says the new rule limits independent
contractors to work and impact hotels’
ability to find workers.
The new rule under the Fair
Labor Standards Act aims to prevent
misclassification of workers that can
affect workers’ rights to minimum wage
and overtime pay, “facilitates wage theft,
allows some employers to undercut their
law-abiding competition and hurts the
economy at-large,” the Labor Department
said in a statement. It uses a multifactor
analysis of six factors defining a worker’s
relationship with an employer, such as
the worker’s opportunities for profit or
loss; the financial stake and nature of any
resources a worker has invested in the
work; the degree of permanence of the
work relationship; the degree of control
an employer has over the individual’s
work; how essential the work is to the
employer’s business; and the worker’s
skill and initiative.
“Misclassifying employees as
independent contractors is a serious
issue that deprives workers of basic
rights and protections,” said Julie Su,
acting secretary of labor. “This rule will
help protect workers, especially those
facing the greatest risk of exploitation, by
making sure they are classified properly
and that they receive the wages they’ve
earned.”
However, AHLA said in its statement
that the new rule, which rescinds the 2021
Independent Contractor Rule, will limit
some individuals’ opportunities 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 Chip Rogers, AHLA
president and CEO. “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.”
Rogers also said AHLA is reviewing
legal options to challenge the new
regulation. Its other arguments against
the new regulation center around
complications that it presents to the
worker classification process.
“The regulation invites confusion
and litigation by establishing 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 vague mandate forcing businesses to
consider the ‘economic realities’ of the
relationship between a worker and a
company as well as an undefined set
of ‘additional factors’ that must also be
considered,” AHLA said in its statement.
“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
more flexibility and autonomy over their
work. This will make it more costly
and time consuming for hoteliers to
hire the independent contractors they
need, harming the industry’s ability
to maintain operations and reducing
business opportunities for independent
contractors.”
AHLA opposes new DOL rule
defining independent contractors
The department claims the change ensures fairness, AHLA says it will limit hotels’ operations
The American Hotel & Lodging Association says the U.S. Department of Labor’s new rule for defining
whether a worker is an independent contractor or a regular employee complicates the process, will
limit opportunities for workers and impact hotels’ ability to find workers.
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