NELP Commends U.S. Department of Labor’s Independent Contractor Misclassification Guidance

New York, NY
—The National Employment Law Project commended the guidance issued today by the U.S. Department of Labor on coverage of employees labeled independent contractors under the Fair Labor Standards Act and related laws.

Wage & Hour Administrator David Weil’s Administrator’s Interpretation (AI) “provides clear and timely guidance to employers, workers and courts seeking to ensure that our nation’s baseline labor protections, like the minimum wage and overtime and family and medical leave, cover most workers in our economy,” said NELP Executive Director Christine Owens.

Owens added, “The AI’s conclusion, that ‘[i]n sum, most workers are employees under the FLSA’s broad definitions,’ is a wake-up reminder to companies playing fast and loose with labels and overusing 1099 hiring.  Our economy cannot be built upon low-paid jobs where workers aren’t getting the basic protections and safety net benefits that we all take for granted.”

The 15-page AI, one of just a handful issued by the Wage and Hour Division since the Obama Administration took office, describes the unique breadth of the 77-year-old definitions of employment contained in the Fair Labor Standards Act, and then traces the judicially-developed multi-factored tests for applying those broad definitions to modern workers.  The AI notes that the critical determination in independent contractor misclassification claims is whether a worker is genuinely in business for himself or herself.

“NELP’s long experience advocating for low-wage workers has taught us that the correct classification of workers as employees or independent contractors is key to securing their legal protections and ensuring fair competition by law-abiding businesses,” said Owens.

Examples of workers affected include janitors being called “franchisees”; port and delivery drivers labelled as “independent contractors”; construction workers required to form a limited-liability company (LLC) in order to get a job; and lower-wage workers in the on-demand economy picking up passengers or cleaning houses for an online company.

NELP works to stop misclassification of employees as independent contractors and to ensure employer accountability in a number of jobs in our economy.


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