The Wage and Hour Division of the Department of Labor provided recent guidance for determining worker classification. The WHD says a business “‘suffers or permits’ an individual to work if, as a matter of economic reality, the individual is dependent on the entity.” The economic reality test factors are:
(a) the extent to which the work performed is integral to the employer’s business;
(b) the worker’s opportunity for profit or loss depending on 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
Businesses are to analyze these factors in conjunction with each other, and no factor is given more weight than another. In particular, the “control” factor should not be given more weight. If you have questions or want to discuss how the relationships with your workers are structured, give us a call at Wilson Worley, PC.
The Wage and Hour Division of the Department of Labor issued an Administrator’s Interpretation on July 15, 2015. The Interpretation discusses the classification of independent contractors and employees. An Interpretation does not have the force of a regulation that has been subject to the procedures of notice and comment. However, the Interpretation is indicative of the stance that the DOL will likely take regarding employee and independent contractor classification. The Interpretation’s actual authority and ability to impact the classification of employees and independent contractors in litigation will be a source of future debate. It is an indication that misclassification continues to be a hot button topic for businesses paying workers.