On Wednesday, the U.S. Department of Labor issued guidance on how to determine whether a worker is an independent contractor or an employee under the Fair Labor Standards Act. The misclassification guidance says most workers qualify as “employees” under the FLSA’s expansive definitions. Here, attorneys tell Law360 why the guidance is significant.
John P. Quirke, McCarter & English LLP
“This guidance broke no real new ground, yet it speaks volumes. The DOL has put the business community on notice that the default standard will be that workers are employees until the company presents an ironclad case to the contrary. As a practical matter, classification will turn largely on whether the worker has an identifiable, functional business and actively manages operations. Absent that, the person will almost inevitably be considered an employee. As a management-side employment lawyer, I’d advise companies seeking to utilize contractors to ask workers first if they are state-registered as a business. If not, they should probably move on or hire the person as an employee.”
Peter D. Stergios, McCarter & English LLP
“Companies and their counsel, particularly in New York, should beware of blindly following DOL’s guidance as to what factors necessarily determine independent contractor status. The Second Circuit, in a recent case of first impression, Eric Glatt et aux v. Fox Searchlight Pictures, rejected DOL’s rigid six-pronged test to determine intern status, finding that the issue turns more on who is the primary beneficiary of the relationship. Hence, DOL’s administrative determination as to contractor status, which relied on six ‘economic reality’ factors, may also be subject to similar criticism, and until it is fully litigated, it should be analyzed carefully as a guide, not a command.”