February 22, 2019

February 22, 2019

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February 20, 2019

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DOL Says Most Workers Are Employees Under Federal Law

Today, the U.S. Department of Labor (“DOL”) issued an Administrator’s Interpretation regarding the misclassification of employees as independent contractors. Having received numerous complaints from workers on this issue over the last several years, the DOL has concluded that most workers are employees under the Fair Labor Standards Act (“FLSA”).  The 15-page memorandum emphasizes that proper classification of workers is necessary to ensure that workers receive workplace protections such as minimum wage, overtime compensation and unemployment insurance.

The DOL explained that the key test to determining whether an employment relationship exists is the “economic realities” test, which focuses on whether the worker is truly in business for him or herself to warrant independent contractor status, or if he or she is economically dependent on the employer and therefore an employee. The agency outlined six factors to consider in analyzing this issue: (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 her managerial skill; (3) the extent of the relative investments of the employer and the worker; (4) whether the work performed requires special skills; (5) the permanency of the relationship; and (6) the degree of control that the employer has over the worker. The DOL cautioned that no single factor is entitled to particular weight or focus, and these factors should not be analyzed “mechanically or in a vacuum.” Rather, the economic realities test must be applied with the understanding that each factor is just one portion of the broader concept of economic dependence. Through several real world examples of how these factors should be analyzed, the DOL concluded that most workers are employees under federal law. In short, this guidance reinforces the FLSA’s “expansive coverage for workers,” and highlights that a careful, detailed analysis is critical when employers classify their workers.

This Administrator’s Interpretation comes just two weeks after the DOL’s proposed rule to expand federal overtime pay regulations and further emphasizes that the DOL is seeking both to increase the number of workers who may receive overtime and decrease the number of workers that are classified as independent contractors. See more about the DOL’s new proposed rule here.

©2019 Greenberg Traurig, LLP. All rights reserved.

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About this Author

Kristine Feher, Greenberg Traurig Law Firm, New Jersey, Labor and Immigration Litigation Law Attorney
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Kristine J. Feher is an experienced employment litigator and trial attorney, whose practice focuses on representing employers and managers in employment discrimination and wrongful discharge cases arising under employment laws such as Title VII of the Civil Rights Act, the pregnancy Discrimination Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the New Jersey Law Against Discrimination, the Conscientious Employee Protection Act, the Family Medical Leave Act, and the New Jersey Family Leave Act. In addition, she litigates claims for...

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Micala Campbell Robinson, Greenberg Traurig Law Firm, New Jersey, Labor and Employment Law Attorney
Of Counsel

Micala Campbell Robinson focuses on employment discrimination and wrongful discharge arising under state and federal laws, including Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the New York State Human Rights Law, the New York City Human Rights Law and the New Jersey Law Against Discrimination. She has defended employers before the Equal Employment Opportunity Commission (EEOC) and state fair employment practice agencies. Micala also has experience in breach of contract and related tort actions, consulting agreements, restrictive covenants, and trade secret litigation.

In addition, Micala counsels clients on a number of employment matters, including wage and hour compliance, sexual harassment training, internal investigations, use of criminal background checks in employment decisions, and employment-based immigration.

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Courteney Lario Caine, Greenberg Traurig Law Firm, New Jersey, Labor and Employment Attorney
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Courteney Lario Caine focuses her practice on representing employers and managers in employment discrimination and wrongful discharge cases arising under employment laws such as Title VII of the Civil Rights Act, the Pregnancy Discrimination Act, the ADEA, the ADA, the FMLA, the Conscientious Employee Protection Act, the New Jersey Law Against Discrimination, and the New Jersey Family Leave Act. In addition, Courteney also handles large-scale commercial litigation matters, including corporate contract disputes and nationwide product liability matters.

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