US Department of Labor Issues Administrator’s Interpretation on Employee Classification
July 23, 2015
Last week, David Weil, an administrator at the US Labor Department, issued a fifteen page Administrator’s Interpretation that seeks to clarify when a person is classified as an independent contractor or an employee. According to the administrator, the department has received numerous complaints from workers alleging misclassification. The new “economic realities” tests primarily depend on are: 1) whether 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; and 3) the extent of the relative investments of the employer and the worker. Previously, many cases had been based on whether the employer exercised control over the individual; such as hours, supervision, or location.
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