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Employee or contractor? Labor Department seeks to clarify rules

When are workers employees? When are they contractors?

The Labor Department issued new guidance Wednesday intended to help companies answer that increasingly fraught question. The issue has taken on greater urgency with the growth of sharing-economy firms such as Uber and TaskRabbit, which increasingly rely on independent workers, often for short-term projects.

The department’s directive emphasizes that a worker who is “economically dependent” on the employer should be treated as an employee. By contrast, a worker must be in business for themselves to be an independent contractor.

The guidance could make it harder for companies to use contractors, labor law experts say. It comes amid a wave of lawsuits against companies such as FedEx, ride-hailing service Lyft and online cleaning service provider Handy, brought by workers who say they should have been treated as employees rather than contractors.

When are workers employees? When are they contractors? The Labor Department issued new guidance Wednesday intended to help companies answer that increasingly fraught question. The issue has taken on greater urgency with the growth of sharing-economy firms such as Uber and TaskRabbit, which increasingly rely on independent workers, often […]

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