DOL States "Most Workers" Are Employees, and Not Independent Contractors

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On Wednesday, July 15, 2015, the United States Department of Labor released guidance addressing the misclassification of employees as independent contractors.  The guidance, an “Administrator’s Interpretation” issued by Wage and Hour Division Administrator David Weil, states that most workers are employees under the Fair Labor Standards Act (“FLSA”). 

Aimed at “curtailing misclassification,” the guidance states that employees misclassified as independent contractors “may not receive important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation.” 

The guidance emphasizes that the FLSA’s definition of employ as “to suffer or permit to work” was designed to ensure broad coverage such that most workers are employees who are entitled to the protections of the Act. 

Courts use a multi-factor “economic realities” test to determine whether a worker is in business for himself or herself, and thus an independent contractor.  The guidance provides analysis and examples for each factor, and states that the factors should be considered in light of the FLSA’s expansive definition of employment.

The Wage and Hour Division has also partnered with the Internal Revenue Service and numerous state agencies to combat employee misclassification.

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