Department of Labor’s Wage and House Division Issues Interpretation on the Identification of Employees Who Are Misclassified as Independent Contractors
On July 15, 2015, the Department of Labor’s Wage and Hour Division (WHD) issued an interpretation of how to determine if a worker is an employee or an independent contractor in relationship to the employer. WHD assumes most workers are employees under the Fair Labor Standards Act (FLSA). Because of ambiguities and vagueness in the statutory definition of this employment relationship, federal courts have fashioned a test for determining the status of a worker under the FLSA. The WHD Interpretation provides an analysis of the courts’ economic realities test and the application of factors that the WHD will be used to determine if a worker is an employee or an independent contractor. It is important to note that these factors must be considered together and no one factor should be over-emphasized. No one factor is determinative of whether a worker is an employee or independent contractor. In general, a worker is an employee if he or she is economically dependent on the employer. A worker is an independent contractor if he or she is in business for him or herself. The factors are intended to help determine the worker status. Just because one factor suggests an employment relationship or an independent contractor relationship does not mean the relationship should be characterized as such. WHD will look at the totality of the circumstances to determine the worker-employer relationship. Be on the lookout for a NLBMDA Regulatory Update with more information on this issue, or find the Regulatory Update on the NLBMDA Regulatory Affairs Webpage.