Big stuff from our friends at the U.S. Department of Labor: on Wednesday, they issued an interpretation regarding workers’ status as employees versus independent contractors under the Fair Labor Standards Act.
Apparently, we’ve all been doing this wrong. According to the DOL, “most workers are employees under the FLSA.” They base this conclusion upon the multi-factorial “economic realities” test that courts use to determine whether a worker is an employee or an independent contractor under the FLSA, which focuses on whether the worker is economically dependent on the employer or in business for him or herself. The interpretation contains a lengthy discussion of the relevant FLSA definitions and the statute’s scope to make the DOL’s argument.
A couple of takeaways. First, an “interpretation” like this is intended to provide guidance and does not have the force of law. Nevertheless, when viewed in the context of the DOL’s ongoing misclassification initiative concerning employees and independent contractors, it clearly shows that the Department is going to be aggressive in going after employers that it believes have improperly classified employees as independent contractors.
Additionally, as the interpretation points out, the Family and Medical Leave Act adopts the FLSA’s definition of “employ” for employer coverage and employee eligibility purposes (subject to additional eligibility requirements). Thus, if this interpretation ultimately gains traction, it could have serious consequences related to the scope and applicability of employers’ leave policies.