Department of Labor Replaces Guidance on Employee Classification

March 13, 2018 By Amber Tenuta - Leave a comment

Employment LawThe U.S. Department of Labor has withdrawn its 2014 guidance regarding the meaning and scope of the term "employment relationship" under the federal Fair Labor Standards Act (FLSA). The 2014 guidance has been replaced with the guidance from 2008.

As a result of this move, the Department of Labor no longer advises that "most workers are employees."

Withdrawn 2014 Guidance 

In 2014, the Department of Labor issued guidance on how to determine whether an employment or independent contractor relationship exists for purposes of the federal FLSA.

The guidance stated, among other things, "Applying the FLSA's definition [of "employ"], workers who are economically dependent on the business of the employer, regardless of skill level, are considered to be employees, and most workers are employees." Effective immediately, this guidance has been withdrawn.

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2008 Guidance Once Again Effective

The 2014 guidance has been replaced by the guidance from 2008. The 2008 guidance does not contain the guidance that "most workers are employees." However, this guidance does include the same "economic realities" test present in the 2014 guidance, under which determination of employee status is made by considering the following factors:

  • Whether the work performed is an integral part of the employer's business.
  • Whether the worker's managerial skill affects the worker's opportunities for profit or loss.
  • The worker's relative investment compared to the employer's investment.
  • Whether work performed requires special business skills, judgment, and initiative.
  • Whether the worker-employer relationship is permanent or indefinite.
  • The nature and degree of the employer's control of the work.

Read the full guidance on Employment Relationship Under the Fair Labor Standards Act.

For more information on employers' responsibilities under the FLSA, please read the Resources for Employers section on the Fair Labor Standards Act website.

Filed Under: Compliance, HR News