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U.S. Department of Labor Issues Opinion Letter Providing Employers with Guidance Regarding the Proper Classification of Workers Under the Fair Labor Standards Act

2019-06-28 10:57:33

     On April 29, 2019, the U.S. Department of Labor ("DOL") issued an opinion letter that provides employers with additional guidance regarding the appropriate classification of certain types of workers under the Fair Labor Standards Act ("FLSA").

      The DOL issued the opinion letter in response to an inquiry submitted by a virtual marketplace company seeking guidance as to whether its service providers should be classified as employees or independent contractors under the FLSA.Contrary to a prior opinion letter  issued by the DOL during the Obama administration, the DOL now determined that the working relationships of these individuals indicated that they should be classified as independent contractors under the FLSA. In reaching this conclusion, the DOL applied the following six-factor balancing test which examines:  

  1. The nature and degree of the potential employer's control;
  2. The permanency of the worker's relationship with the potential employer;
  3. The amount of the worker's investment in facilities, equipment or helpers;
  4. The amount of skill, initiative, judgment or foresight required for the worker's services;
  5. The worker's opportunity for profit or loss; and
  6. The extent of integration of the worker's services into the potential employer's business. 

     Weighing these six factors, the DOL found that the workers were economically independent, in part, because the employer minimally supervised the workers, allowed them to set their own hours, and allowed them to simultaneously work for a competitor. Additionally, the employer did not invest in any facilities, equipment, or helpers for the workers, or provide them with any training. Lastly, the DOL found that the workers had a substantial amount of control in determining their own level of compensation and were not integrated into the employer's business because they did not develop or maintain the virtual platform.

      Based on this analysis, the DOL concluded that the workers were not employees under the FLSA, but rather were independent contractors. The DOL's letter provides employers with important insight into its current position on the proper classification of workers under the "economic reality" test of the FLSA.

  

If you have any questions or concerns regarding the classification of your own workers, please contact your Allen Norton & Blue attorney.

  

-Barron Dickinson , Associate Attorney with ANB's Tallahassee Office.

  

With offices in Coral Gables, Orlando, Tampa, and Tallahassee, Allen Norton & Blue, P.A. is Florida's preeminent labor and employment law firm that partners with its clients to build lasting relationships focusing on innovative strategies to prevent and resolve workplace issues efficiently and effectively.


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