DOL to Release Independent Contractor Guidance

June 16, 2015

pic-employees-smOn June 5, David Weil, Administrator of the Department of Labor’s (DOL) Wage and Hour Division (WHD), stated that his office is preparing to release guidance addressing how to assess whether a worker is properly classified as an independent contractor.

Misclassification of employees as independent contractors has been a primary concern for the DOL for several years, as independent contractors are not protected by most employment laws such as Title VII of the Civil Rights Act and the Fair Labor Standards Act (FLSA).

There are a series of tests companies are currently subjected to for determining whether their workers are classified as employees or independent contractors. The test for federal employment discrimination laws differs from that for the FLSA, and  states have their own versions of these tests, which can differ even within the same state. This all depends on whether the tests are being used to determine worker classification for purposes of workers’ compensation, wage statutes, unemployment insurance, or other laws. Typical factors include, among other things, the degree of control exercised by the company over the worker, the worker’s opportunity for profit or loss and investment in his or her business, and the extent to which the work performed by the worker is integral to the employer’s business.

Administrator Weil indicated that the WHD’s guidance would provide a specific set of criteria for analysis and build off these previous tests. Courts have applied the “economic realities” test for FLSA purposes in the past, which is designed to determine the economic dependence of the worker on the employer. Irrespective of what the DOL issues, companies will still be subject to different employment classification tests for other state and/or federal statutes.

After his address, Weil declined to give a specific time frame for the issuance of the guidance but did say that the target was “early summer.”