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Legal Alert - Wage and Hour Division Targets Independent Contractors

07/23/2015

by John Lomax

Last week, the U.S. Department of Labor’s Wage and Hour Division released an Administrator’s Interpretation providing guidance on the misclassification of workers as independent contractors. The guidance sets forth a comprehensive assessment of how employers and courts should interpret the Fair Labor Standards Act (FLSA) – which governs overtime and minimum wage standards – in determining whether workers are employees or independent contractors. While demand-economy workers and companies are not mentioned by name, the guidance tackles many of the arguments that have been advanced recently to justify the use of independent contractors. The Interpretation stresses two key points: i) the FLSA’s economic realities test governs the analysis and focuses on whether the worker is economically dependent on the employer or is in business for him or herself; and ii) while several factors may be considered in making that determination, “no one factor (particularly the control factor) is determinative of whether a worker is an employee.”

[Read the full alert]