Recent Department of Labor ruling affects news publishers and independent contractors

It’s important for media organizations and freelancers to look at the economic reality factors and to make sure that they comply with them as best as they can because it is going to be immediately under this rule.”

Camille Olson, partner at Seyfarth Shaw and a board member of America’s Newspapers

News publishers must understand how a writer is contracted following a new rule going into effect this month.

The Department of Labor (DOL) updated how employers are to consider if a worker is an independent contractor under the Fair Labor Standards Act starting March 11. The rule provides guidance on six factors instituted by the DOL for relationships between a worker and a potential employer. Those six factors are:

• Skill and initiative: News publishers (the employer) will need to factor in whether a worker uses specialized skills to do the work and contribute to the business' initiative.
• Worker’s opportunity for profit or loss: This factor must be considered when a worker exercises a skill that affects the worker's economic success or failure in performing the work.
• Investments by the worker and the employer: News publishers will also have to consider the costs a writer carries to do their job, which is not evidence of contractor investment and indicates employee status.
• Nature and degree of control: Scheduling and supervision over work done and a worker's ability to work for others are relevant in determining the nature and degree of control over their work performance.
• Degree of permanence of the relationship: This factor would be weighed in favor of the worker being an independent contractor when the work relationship is definite in duration, non-exclusive, project-based and sporadic based on the worker being in business for themself and marketing their service to multiple entities.
• Integral part of the employer’s business: The extent to which the work performed is an integral part of the employer's business considers whether the work is critical, necessary or central to the employer's business.

“The Department believes that this final rule will provide more consistent guidance to employers as they determine whether workers are economically dependent on the employer for work or are in business for themselves, as well as useful guidance to workers on whether they are correctly classified as employees or independent contractors,” the DOL said in its January 2024 ruling. 

News publishers must review their practices before contracting with independent contractors, Camille Olson, partner at Seyfarth Shaw and a board member of America’s Newspapers, told E&P. “It’s important for media organizations and freelancers to look at the economic reality factors and to make sure that they comply with them as best as they can because it is going to be immediately under this rule,” Olson said. 

Holly Lubart, vice president of government affairs at News/Media Alliance

Holly Lubart, vice president of government affairs at News/Media Alliance, a trade organization representing over 2,000 newspapers and magazines in the U.S. and Canada, told Editor & Publisher the ruling doesn’t define independent contractors and leaves ambiguous factors to be applied in determining the classification of workers. News publishers “will really continue to look at the factors that are in the rule as they make these business decisions,” Lubart said.

The ruling is being challenged as freelance writers and editors in Georgia have sued the DOL, alleging the rule makes it difficult for companies to treat workers as independent contractors and is illegal. Others believe the rule will make things difficult.

Freelance contractors see differences in take-home pay as staff employees obtain benefits, which makes classification important, Larry Goldbetter, president of the National Writers Union and Freelance Solidarity Project, said. “These standards about entrepreneurial ability for the vast majority of independent contractors [is] not a real factor,” Goldbetter said.

Keldy Ortiz is a New York-based writer and educator. He has written for publications locally and nationally. Photo credit: Michael Jackson