BREAKING: DOL Issues Contractor/Employee Misclassification Interpretation
On July 15, 2015, the U.S. Department of Labor issued an Administrator’s Interpretation detailing the DOL’s position on the factors used and emphasized in determining employee versus independent contractor status, which are relevant for coverage not only under the Fair Labor Standards Act (FLSA) but also the Family and Medical Leave Act (FMLA). The Interpretation focuses on the FLSA’s broad definition of employ, as “suffer or permit” to work, and its intention to “ensure as broad of a scope of statutory coverage as possible.” The Interpretation reviews factor-by-factor the “economic realities” test used by the courts to determine whether, “as a matter of economic reality, the individual is dependent on the entity.” Contractors will primarily be those “workers with economic independence who are operating a business of their own. On the other hand, workers who are economically dependent on the employer, regardless of skill level, are employees covered by the FLSA.”
The factors reviewed are: “(A) the extent to which the work performed is an integral part of the employer’s business; (B) the worker’s opportunity for profit or loss depending on his or her managerial skill; (C) the extent of the relative investments of the employer and the worker; (D) whether the work performed requires special skills and initiative; (E) the permanency of the relationship; and (F) the degree of control exercised or retained by the employer.”
Significantly, the DOL states that the factor of “control” is not determinative, and the employer’s use of agreements and labels are not relevant to the determination. This can be viewed as confirmation of the DOL's continued assault on "independent contractor" status.
For more information, contact David Carr or any member of Ice Miller's Labor, Employment and Immigration Group.
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.