If your trade show or event organization works with independent contractors, it’s important to know how a new employment rule that takes effect on March 11 could impact labor costs for businesses that rely on contract labor or freelancers, such as trucking, manufacturing and more.

The industry sector most likely to be impacted: general service contractors, AV companies, freight companies and other suppliers that rely on independent contractors. 

Why it matters: Increased costs for suppliers could be passed on to event organizers or exhibitors, who were already facing increases of 7%-30% for trade show services last year, according to a 2022 Material Handling & Labor Rate Survey by The Exhibitor Advocate.

Related: NEW RESEARCH PROVIDES BENCHMARKS FOR TRADE SHOW LABOR AND MATERIALS HANDLING COSTS IN 16 CITIES  

Back story: In January, the U.S. Department of Labor issued a rule that may force companies to treat some workers as employees rather than less expensive independent contractors, in a move that has riled business groups and will likely prompt legal challenges, according to Reuters.

Most federal and state labor laws — such as those requiring a minimum wage and overtime pay — apply only to a company's employees. Studies suggest employees can cost companies up to 30% more than independent contractors. The rule will require workers to be considered employees rather than contractors when they are "economically dependent" on a company, according to reporting by Reuters.

Industry perspective: We asked legal counsel and industry associations for their take on the issue. Here’s what they told us.

“I don’t think people realize the impact this could potentially have, and we don’t know that yet either,” said Julie Kagy, executive director for Exhibition Services & Contractors Association (ESCA). 

Here’s an excerpt from Kagy’s post on ESCA’s membership forum:

“As an association dedicated to serving the trade show industry, it’s essential for us to stay informed about these changes and understand how they may impact our operations. While the full extent of the impact is yet to be seen, it’s crucial for businesses to be prepared for potential adjustments in labor practices and compliance requirements.

We’re closely monitoring this situation and will continue to provide updates as more information becomes available. In the meantime, I encourage you to read the full article for a deeper understanding of the rule’s implications.”

Dasher Lowe, executive director of the Exhibit Designs & Producers Association (EDPA) said: “EDPA is in alignment with ESCA's response. We are closely monitoring, as well.”

The Exhibitor Advocate Executive Director Jessica Sibila added: “We have not heard from any of our members that this is a concern for them. It’s possible the news — and its potential implications — are not well known to exhibitors at this time. We, too, will be watching this closely and will regroup on the topic if additional action is needed.

This is a developing story. Stay tuned for further updates on this important industry issue.