By Lois M. Kosch
Lois M. Kosch is a partner at Wilson Turner Kosmo. She specializes in counseling and representing employers in all aspects of employment law and litigation. Ms. Kosch is a former member of the Labor and Employment Law Section's Executive Committee.
On July 15, 2015, the U.S. Department of Labor issued guidance aimed at curbing the misclassification of employees as independent contractors pursuant to the Fair Labor Standards Act (FLSA). Specifically, the DOL defined " independent contractor" narrowly enough for many previously classified as independent contractors to now be classified as employees.
In narrowing the definition of independent contractor, this new guidance focuses on the "economic realities" test, which looks at whether workers are economically dependent on the employer or in business for themselves, rather than the "control test," which focuses on the degree to which a business controls an individual's work.
According to the DOL, employers should look to the following six factors in conducting an economic realities test: (1) the extent to which the work performed is an integral part of the employer's business; (2) the worker's opportunity for profit or loss depending on his/her managerial skill; (3) the extent of the relative investments of the employer and the worker; (4) whether the work performed requires special skills and initiative; (5) the permanency of the relationship; and (6) the degree of control exercised or retained by the employer. The DOL further noted that each factor should be...
