New Department of Labor rule clarifies independent-contractor status

Labor Paper readers very rarely face misclassification since almost all work under collective bargaining agreements. But they may occasionally share job sites with day laborers or subcontractors who work without labor agreements – or even the basic protections of the U.S. Fair Labor Standards Act.

So a new U.S. Department of Labor rule about whether a worker is truly an independent contractor or an employee may be relevant. Plus, the change is consistent with federal law, reasonable, and neutral regarding the balance between business and workers.

In fact, even the announcement issued by the department on Jan. 11 was framed to stress its logic and value for law-abiding companies: “Final rule will help employers distinguish between employees and independent contractors,” helping honest companies how to accurately determine whether a worker is an employee or independent contractor under the FLSA.

“Independent contractors in business for themselves play an important role in our economy,” the DOL said, “and this rule won’t change that. What it will do is ensure employees receive the protections and benefits they are due.”

Effective March 11, 2024, the revision of the existing rule clarifies government guidance on how to analyze who is an employee or independent contractor. This final rule rescinds the Trump administration’s Independent Contractor Status Under the Fair Labor Standards Act rule published Jan. 7, 2021, and replaces it with an analysis more consistent with the FLSA as interpreted by longstanding judicial precedent.

“The misclassification of employees as independent contractors may deny workers minimum wage, overtime pay, and other protections,” the DOL reminded the country. “This final rule will reduce the risk that employees are misclassified as independent contractors while providing a consistent approach for businesses.”

By law, DOL’s Wage and Hour Division protects workers’ rights. To do so effectively, according to Wage and Hour Division administrator Jessica Looman, “We must help businesses and workers understand how to differentiate employees from independent contractors who are in business for themselves … to provide guidance on whether a worker is an employee or independent contractor under the FLSA.

“This rule will help to ensure that workers who are employees are paid the minimum wage and overtime due them, and that responsible employers that comply with the law are not placed at a competitive disadvantage when competing against employers that misclassify employees.

The final rule revises DOL’s guidance by returning to the multi-factor, totality-of-the-circumstances analysis to assess whether a worker is an employee or an independent contractor under the FLSA; explaining that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors; and using the longstanding interpretation of the economic-reality factors.

Specifically, the factors to decide if companies are complying with the law are:

* Opportunity for profit or loss depending on managerial skill,

* Investments by the worker and the employer,

* Permanence of the work relationship,

* Nature and degree of control,

* Whether the work performed is integral to the employer’s business, and

* Skill and initiative.

“The 2021 Independent Contractor Rule was out of sync with longstanding judicial precedent and increased the likelihood of misclassification,” Looman continued. “The new rule’s realignment of the department’s guidance with judicial precedent will reduce confusion, improve compliance and better protect working people.”

Employers violating the rule – that is, federal law – face significant penalties, according to labor lawyers:

1. Wage, tax, and employment-eligibility violations

2. Tax and payroll fines

3. Legal and punitive damages

4. Back payments to re-classified workers

5. Reputation damage

“Proper classification of employees and independent contractors results in workers who are employees under the FLSA receiving the hard-earned wages and protections they’re legally entitled to, while also ensuring that independent businesses continue to thrive,” Looman added. “Employees across industries and workplaces should have access to both flexibility and essential worker rights.”

It’s the law. Report suspected violations that can undercut honest contractors and other employers.

‘Great Wealth Transfer’ – different strokes for different folks

The “Great Wealth Transfer” has been a buzz term for a while – especially in business media – but it has different meanings that can provoke resentment and envy, excitement or outrage, and even confusion or acceptance.

In the 1970s and ’80s, Milton Friedman was embraced by Big Business and its Republican handmaidens who used his “Greed is Good” philosophy, and critics warned of increases in wealth inequality, and have blamed him ever since.

A U.S. economist awarded a 1976 Nobel Memorial Prize in Economic Sciences for research on consumption analysis, monetary history and theory and the complexity of stabilization policies, Friedman’s theory was basically “the social responsibility of business is to increase its profits.” Period. Maximizing profits to stockholders, the doctrine said, would be an efficient way to benefit society.

“The Great Wealth Transfer has been a result of a number of factors, including the declining bargaining power of workers, tax policies that favor the wealthy, and a shift in corporate culture toward maximizing shareholder value,” commented business analyst Chris Calhoun, who especially blasts corporations’ stock buybacks, which artificially boost stock prices and stockholder profits. Also, a “profits above all” approach can decrease investments, workers training and many long-term plans.

“This emphasis on profits has led to a narrow focus on short-term gains and a disregard for the interests of other stakeholders, including employees, communities and the environment,” Calhoun continued. “As a result, the distribution of wealth has become increasingly unequal, with the top 1% of the population owning a disproportionate share of the wealth.”

Eighteen years ago, economist Paul Krugman brought widespread criticism of Friedman to the 21st century with an analysis of George W. Bush continuing to enrich the wealthy at the expense of everyone else (and foreshadowing Donald Trump’s 2017 tax reforms that mostly benefited the rich).

“So much growth is being siphoned off to a small, wealthy minority that most Americans are failing to gain ground even during a time of economic growth – and they know it.”

The GOP has justified lowering taxes on the rich by a flawed (and subsequently confirmed) “trickle-down” theory that as the rich and powerful became wealthier, they would invest and expand the economy. A related approach rationalized fighting any hike in the country’s minimum wage and opposing workers’ unionizing – both of which would impede profits, they argued.

“At the same time, there has been a concerted attack on the institutions that have helped moderate inequality -- in particular, unions,” Krugman said. “During the late 1970s and early 1980s, at least 1 in every 20 workers who voted for a union was illegally fired; some estimates put the number as high as 1 in 8.”
Another claim of a Great Wealth Transfer focuses not on class, but generations, as complaints mount about decades of skewed government policies inadvertently resulting in a huge transfer of wealth to Baby Boomers (those born 1946-1964), from future generations, especially Gen X (born 1965-1980), Millennials (1981-1996) and Gen Z (1997-2012). According to Bank of America Research, trillions of dollars of wealth moved from the public to private holdings over the last 40 years – in particular household wealth, which ballooned from $17 trillion to $150 trillion (and Boomers and older Americans have two-thirds – $146 trillion – of that despite challenges such as 1970s inflation and occasional financial crises.

“The Boomer generation is so big that it still wields enough political and financial clout to press for a system that works for them.

“Boomers have been and still are consuming more than their fair share of the pie,” wrote Boomer Howard Marks. “This will leave future generations saddled with substantial debt stemming from expenditures they didn’t benefit from proportionally.”

That particular Great Wealth Transfer assertion says the Millennials and Gen Z-ers have economic struggles because of Boomers, according to a 2023 survey by OnePoll.

But a third Great Wealth Transfer is imminent, according to an estimate by Coldwell Banker – and Millennials are predicted to benefit. Between $84 trillion and $68 trillion could be inherited by Millennials through 2045, adds the financial market intelligence firm Cerulli and Associates, as Boomers pass on – and pass on their assets.

“The Baby Boomer generation is expected to leave a significant amount of money to their Millennial children,” wrote Jack Kelly in Forbes magazine last summer. “It's estimated that more than $68 trillion will be bequeathed to their offspring. The great wealth transfer is expected to make Millennials the richest generation in American history.

“This will be a substantial change in fortune for Millennials, who have had to deal with recessions, exorbitant college tuition, nearly unaffordable home prices, and trying to maintain a lifestyle that can’t compare to their parents,” he continued.

That could result in increased consumer spending and change the job market and the economy, and possibly make a generally progressive generation even more focused on fair policies by a government that a more engaged generation will elect.

Finally, a detached look at some statistics seems to demonstrate that overall changes in generations’ share of wealth simply, maybe inevitably, shifts, with positives and negatives experienced by different generations over the years. A Federal Reserve study illustrates losses and gains since 1989, with Boomers collectively losing a few percent, Gen X gaining a lot, and Millennials gaining far more.

If there’s a bottom line, then, it may be that change happens. And voters’ influences on government and policies, whether following a relatively elitist perspective like Friedman’s or more grassroots advocacy as articulated by U.S. Sens. Bernie Sanders and Elizabeth Warren simply make minor adjustments to the pendulum of “free market” economics.

In 2006, Krugman nevertheless cautioned about dire social consequences of uneven wealth transfers – a warning that seems relevant in this election year.

“The statistical evidence shows unequal societies tend to be corrupt societies,” he said. “When there are huge disparities in wealth, the rich have both the motive and the means to corrupt the system on their behalf.”

West Central Illinois Labor Council’s new president sees challenges, changes ahead

Small changes can make big differences, and early in his tenure as president of the West Central Illinois Labor Council, Chase Carlton looks ahead at the organization doing more to help union locals get involved, show solidarity with other unions, and strengthen the labor movement.

“We need to do more,” says Carlton, a 35-year-old member of Local 34 of the International Brotherhood of Electrical Workers, “– find interesting ways to operate beyond the status quo.”

The Aurora native, who now lives in Minier with his wife and two daughters, was recruited to be an IBEW delegate a couple of years ago, he says.

“I’d never heard of it,” he says.

He had been involved in his local, serving on its Political Action Committee and its exam board, but was new to the idea of Central Labor Councils. Nationwide, these regional coordinating bodies bring together unions from different industries to take action on local and statewide issues. Organized by county or regions, labor councils organize, mobilize and give working families another voice in the political process.

Now working industrial maintenance for a contractor at BioUrja (the former ADM plant), Carlton is about to move to Cargill in Bloomington. And he’s about to move to discuss next steps for the area labor council at its Feb. 20 planning and budget meeting.

“I think we can improve, and I’d like to get consensus on ideas moving forward.

“We need to get the word out,” he continues, “for the council and for unions, get more interest. Labor’s been good to me, and we all need to tell our friends about unions. It helps families with better pay and benefits, particularly in construction.”

He get some experience seeing consensus-building this winter at an Illinois AFL-CIO statewide Committee on Political Education (COPE) meeting in Countryside, where representatives from most of the 22 labor councils in the state met to discuss political endorsements.

“We voted to support representatives for the state house, state senate, and federal congressional districts as well as state supreme and appellate court judges,” he says. “It was good to see how this process works and it ended up being a really neat thing to experience in person.”

Illinois’ 22 labor councils also have been invited to take part with four other states in a pilot program to modernize the U.S. labor movement through labor councils, he says.

“We’ll share everyone’s experiences, get some guidance, and hopefully get more people involved and do more,” he says.

The West Central Illinois Labor Council covers unions in eight counties: Fulton, Marshall, Mason, McDonough, Peoria, Stark, Tazewell and Woodford.

Teamsters facing down IDOT, Anheuser-Busch

The International Brotherhood of Teamsters represent about 4,500 workers in 10 Locals at the Illinois Department of Transportation, and Teamsters throughout the state have voted to authorize a strike if leaders deem it necessary.

The vote came days after rank and file rallies in Ottawa, Schaumburg and other communities where IDOT has nine District offices.

The IDOT Teamsters have been working without contract for seven months, and the union and the State remain far apart despite about 20 bargaining sessions and the presence of a mediator.

A key dispute is IDOT negotiators demanding the Teamsters give up their current health insurance – previously achieved instead of a $3/hour pay raise – and switch to the State of Illinois plan. Because of increased costs, losing their current health-care package would effectively cut workers’ compensation by 23%, according to JP Fyans, President of IBT Local 916 in Springfield.  

The IDOT Teamsters work as snowplow drivers, highway maintenance workers and other safety jobs.

“These hardworking, essential workers help keep our roads safe and our economy moving, especially during the pandemic,” said Ramon Williams, President of Local 700 work in Park Ridge. “They deserve a fair contract that recognizes the value of their

The Teamsters says they’re ready for a work stoppage if progress isn’t forthcoming.

“Our members have sacrificed wages and other benefits in previous negotiations to maintain their Teamster healthcare and we are not going to just walk away from it now without a fight”, said Teamsters Joint Council 25 President Thomas W. Stiede. “These workers keep the Illinois traveling public safe, and it’s unfortunate to see their value being undermined by this administration. We are nearing the breaking-point and may be left with no other choice than to strike this winter.”

IDOT spokesman Paul Wappel issued a statement that the agency “values its employees and looks forward to continuing a successful partnership with all of its collective-bargaining units.”

Elsewhere, the Teamsters have asked Anheuser-Busch to submit its final offer in contract negotiations before the current agreement expires Feb. 29, and the union warns of a strike by 5,000 Teamsters on March 1 if a settlement isn’t reached.

The Teamsters National Negotiating Committee in December announced that 99% of A-B Teamsters nationwide are in favor of striking. The union seeks a new contract with better wages, job security, health care and other benefits. The company proposed a deal threatening Teamster jobs through potential brewery closures and layoffs, the IBT said.

Teamsters General President Sean O’Brien on Feb. 1 said that Anheuser-Busch hasn’t committed to job security since November 16, and that a work stoppage seems unavoidable.

“The halting of beer production at Anheuser-Busch’s U.S. breweries appears imminent,” he said.

At press time, no negotiations have been scheduled. With U.S. headquarters in St. Louis, Anheuser-Busch employs about 5,000 workers at 12 breweries in 11 states.

Contract talks with A-B – maker of Budweiser products, Michelob Ultra, Busch and Stella Artois –stopped in November. Previously the parties did reach agreement on one key issue: eliminating a two-tier health plan.

Anheuser-Busch is owned by AB InBev, which reported $32 billion in profits last year.

“We’ve made our demands clear. We’ve made our expectations clear,” said Padellaro, director of the Teamsters’ brewery conference, speaking to Huffington Post. “This company is going to put themselves on strike come March 1 if we don’t have an agreement that we can all be proud of.”

There’s some optimism in the membership.

“We feel like at this rate the momentum is swinging in our direction,” said D.J. Edwards, also in HuffPost.

“It’s time to take care of the worker,” said the 37-year-old Jacksonville, Fla., Teamster who’s been at A-B for five years.

However, the union seems ready for anything at A-B facilities: Baldwinsville, N.Y.; Cartersville, Ga.; Columbus, Ohio; Fairfield, Calif.; Fort Collins, Colo.; Houston, Texas; Jacksonville, Fla.; Los Angeles, Calif.; Merrimack, N.H.; Newark, N.J.; St. Louis, Mo., and Williamsburg, Va.

“Without a contract by February 29, there won’t be any beer come March,” the Teamsters warned, and O’Brien added, “If Anheuser-Busch’s executives can’t get their act together to negotiate an agreement that respects workers, we will see them out on the streets.”

Behind the scene and beyond the public eye, talks start on Peoria medical transport pact

You can’t call talks about an early renewal of the City of Peoria’s contract with Advanced Medical Transport a “back room deal.” First, there’s no deal. Next, City staff is involved.

Discussions, if not negotiations, between the City of Peoria and AMT are underway, involving City Manager Patrick Urich, Emergency Communications Center Director Brandon Blayney, and AMT executive Andrew Rand, plus Fire Chief Shawn Sollberger. Peoria Firefighters Union Local 50 isn’t directly participating yet.

“Local 50 will surely weigh in from a union perspective,” comments Peoria Mayor Rita Ali.

“It is good to begin discussions early,” she continues. “It is too early, in my opinion, to execute a new contract.”

Councilman Charles Grayeb of the 2^nd District seems somewhat surprised.

“I do not believe the Council has authorized or directed staff to do so,” he says. “It would be inappropriate if there are ongoing clandestine discussions without direction from our elected officials.”

Urich and Rand have worked together before. Before becoming Peoria’s City Manager in 2011, he was Peoria County Administrator from 2001-2011. Rand was a Peoria County Board Member from District 4 from 2008-2022.

Ali did not disagree with Grayeb’s emphasis on involving elected as well as appointed officials.

“Ultimately, the City Council will have to approve or deny the contract,” she adds. “We are quite a ways from that and there’s no sense of urgency from my viewpoint.”

Initially established in 1975 by Peoria hospitals merging their ambulance services, the private non-profit venture in 1978 was named Peoria Hospitals Mobile Medical Services (PHMMS), and in 1991 started doing business as Advanced Medical Transport of Central Illinois (which also has other operations, including Advanced Medical Transport East, Inc., Advanced Medical Transport of Springfield, Inc., and Advanced Medical Transport of Iowa).

Although AMT rates aren’t posted, sources estimated the corporation charges about $1,000 for Basic Level Service, $1,500 for Advanced Life Support (paramedic-level service) plus fuel costs.

In general, people being treated by paramedics are responsible for paying any fees for transport, or treatment, even if they didn’t request an ambulance. Some health insurance policies cover the expense, but Medicare does not.

According to the most recent tax return for “Peoria Hospitals Mobile Medical Services d/b/a Adv Medical Trans of Central IL” (Internal Revenue Service Form 990, from 2021), the corporation reported program service revenue of $32,028,441 that year – a 17% increase from the 2020.

The City’s current agreement, which expires in December 2026, says the arrangement is “non-exclusive,” but AMT is the city of Peoria’s only transport provider.

“AMT has a monopoly,” says Captain/ Paramedic Josh Martin, president of Local 50. “They can set their rates at whatever they want, which is terrible for residents. In Springfield, where AMT also operates, there are three private ambulance services and none of them have a contract with the City of Springfield. So why would Peoria?” 

The City continues to provide dispatch services, and AMT pays the City more than $85,000 annually. Peoria’s Emergency Communications Center, which dispatches 911 calls for emergency medical services, fire and police throughout the City of Peoria and Peoria County, has dozens of workers, each of whom earns around $48,000 a year.

The Peoria Fire Department currently is a non-transport Advanced Life Support first-responder. Nevertheless, “the Peoria Fire Department could transport,” Martin says. “However, it would have to be after the AMT/City of Peoria transport agreement expires on Dec. 31, 2026.”

Grayeb says, “Firefighters have always been and continue to be fire/ rescue personnel and arrive on the scene, more often than not, ahead of AMT.”

Martin agrees, noting that “response duplication is typical. The majority of the time (70-75%), the Fire Department arrives on scene first and initiates patient care. Furthermore, oftentimes a firefighter/ paramedic will ride in the ambulance to the hospital to further assist with patient care.

“In 2023, Peoria firefighter/paramedics rode into the hospital with AMT 587 times,” he adds.

An eight-page PowerPoint-style package presented to the City titled “City of Peoria and AMT Partnership” is vague on suggested changes, but it does propose a 10-year agreement, perhaps anticipating City preferences.

Ali says any renewal should include key elements such as high-quality services, timely and efficient services, affordability, fairness, high standards of service delivery, and a shorter contract term.

“I would not be in favor of another 20-year-long contract,” she tells the Community Word. “If renewed, five or ten years is more reasonable.

“Quality and timely ambulatory and paramedic services, under the current arrangement, have improved in the past several years and relationships between city fire personnel (including leadership) and AMT personnel (including leadership) are better than they were five or six years ago,” she adds. But “I am not a big fan of subcontracting government services if they can be performed from within with high quality, proficiency and affordability.”

Grayeb stresses the efficiency and accountability of local-government oversight.

“I feel fire/ rescue is best left to the PFD,” he says. “Our taxpayers should not subsidize a private operation when public safety is at stake. In the mid-’90s we missed – by one vote – the municipalization of our ambulance function.

“Taxpayers are funding this private and expensive operation!” Grayeb continues. “This has been true for a long time. It is time to return this function to the municipality. Public safety in the fire/ rescue area should not be outsourced. Would we do that for police?”

With more than 300 employees, AMT is led by Rand, whose annual compensation was more than $630,000 in 2021, according to that year’s IRS tax form 990.

Meanwhile, two PFD rescue units in 2019 were disbanded in a cost-cutting move, but the Peoria City Council in November approved in its 2024-2025 budget spending $1.2 million to restore one unit.

That’s not enough, Grayeb says.

“Rescue One was inadequately staffed with a so-called ‘jump crew,’ and it remains inadequately staffed. We enhanced its staffing only nominally.

“We need two fully staffed rescue trucks as we previously did,” he says. “Shorting public safety will catch up with us with eventual dire results.”

There may be an opportunity next month to return Rescue One to full staffing, Martin says.

“To restore the rescue squad permanently with three personnel it would cost around $1.3 million per year,” he says. “The city has an opportunity to apply for a grant in March that would staff the rescue squad, and in return free up the funds allocated for overtime staffing.”

No timetable for possibly renewing an agreement with AMT for ambulance service has been announced.