not in business skills, judgment, and initiative. To indicate independence, the worker needs to use his skills in a distinct, business-like manner (i.e., operate as an independent business).
FACTOR 5:
Is the Relationship between the Worker and the Employer Permanent or Indefinite? A permanent, indefinite term of employment suggests that the worker is an employee, while a lack of permanency or indefiniteness suggests an independent contractor relationship. According to the DOL, a working relationship of weeks or months suggests permanency/indefiniteness, as an independent contractor usually only works on a single project instead of repeatedly working for the same employer. But the lack of permanency/indefiniteness does not per se indicate an independent contractor relationship; instead, the reason for the lack of permanency/indefiniteness must be examined to determine whether it is a result of “‘operational characteristics intrinsic to the industry’” (i.e., employee) or of the worker’s “own independent business initiative” (i.e., independent contractor).
PERFECT ALIGNMENT. Relationship. Reliability. Respect. At the center of our Employee Benefits and Labor & Employment practices.
FACTOR 6:
What is the Nature and Degree of the Employer’s Control? This factor examines whether the worker has independence from the employer. The inquiry is on whether the employee sufficiently controls the work performed so that the worker is operating his or her own business. And context matters. For example, if the worker works from home, the employer should exercise less control. Because control is the key factor in the common law test, the DOL cautions that, under the FLSA, this factor does not carry more weight than any of the other factors. That is, even if the necessary control is absent, a worker may still be an employee if the other factors establish a lack of economic independence. In sum, the DOL did not set forth a new test. Rather, the DOL merged the FLSA’s broad “suffer or permit to work” definition into the economic realities test, asserting that the key inquiry is whether or not the worker is economically dependent from the employer. This is a continuation of the DOL’s disfavor for the use of independent contractors. The DOL’s broad interpretation is aimed at restricting the use of independent contractors and, in turn, the reclassification of workers as employees. Thus, the Interpretation indicates that the DOL will continue, if not even increase its efforts, to challenge employer’s independent contractor classifications. If the DOL’s interpretation is correct and most independent contractors are employees, employers will be significantly impacted. For example, workers once classified as independent contractors would be entitled to the FLSA’s minimum wage and overtime protections and may be entitled health insurance, retirement contributions, and workers’ compensation coverage. And employers would have tax withholding and social security payment obligations. As a result, employers who use independent contractors should examine the economic dependence of each worker to ensure that it has properly classified it workers. A copy of the Interpretation can be found at: www.dol.gov/whd/workers/misclassification/AI-2015_1.htm.
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ONE AREA OF PRACTICE. ONE FOCUS. The Kullman Firm has engaged in the practice of labor and employment law on behalf of management since 1946. ! Employment Discrimination Litigation ! OSHA ! Wrongful Discharge Litigation ! Collective Bargaining Negotiations ! Labor and ADR Arbitrations ! Union Representation Cases
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Matthew R. Courtner, Attorney Rainey Kizer Reviere & Bell PLC mrc@raineykizer.com www.raineykizer.com
www.kullmanlaw.com
Attorney responsible for content of this ad: Martin J. Regimbal www.HRProfessionalsMagazine.com
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