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  June 17, 2016

man.pngThe assault on independent contractor classification of workers by employers just heightened another step. On July 15, 2015, the US Department Of Labor (DOL) issued a new guidance that narrows the definition even more. Many workers who have been classified as independent contractors will have to be recognized as employeesThe new definition places emphasis on the "economic realities" test. 

Six Factors DOL Says Employers Must Look At

  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 or 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.
  6. The degree of control exercised or retained by the employer.

The DOL says no one of these factors is determinative. It further says that this checklist is not all-inclusive. 

Workers Who May Not Meet The Test
construction workers.jpg
If employers apply these six factors, many workers frequently considered independent contractors such as carpenters, construction workers, roofers, cable installers and electricians may not meet the test. However, the list could be much more extensive than this. Any independent contractor classification could be suspect.

Employers Need To Analyze and Document Classification Decision

Unfortunately, this new definition still is very subjective and gives employers little concrete ground on which to make this risky determination. Employers should go through careful analysis of any worker they attempt to classify as an independent contractor and maintain records documenting the analysis process and how the determination was justified. Examples of records employers should keep include: worker's business license and business cards, tax records from the independent contractor showing how it declared income, and work history on a project showing that the employer's engagement was limited.

This guidance is Administrator's Interpretation No. 2015-1.

If you are concerned that you might have misclassified workers, contact Adair M. Buckner, Attorney At Law for a complimentary initial consultation*.

*(The free consultation does not cover actual review of documents or giving legal advice on a specific situation.)

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Article Topics:
Labor & Employment Law