Employers have long grappled with the delicate balancing act of employee and independent contractor classifications, and recent high-profile court cases served to renew focus on the matter. On Wednesday, July 15, the U.S. Department of Labor (DOL) joined the discussion with the issuance of what it calls a "litmus test" for employers to use in the classification process.
The guidelines seek to clarify, not change, existing law under the Fair Labor Standards Act, and specifically expand upon the "economic realities" test employers are to use when classifying a worker as an independent contractor. Under this test, factors such as the employer's degree of control over the worker and work product, the permanence of the work relationship, and the level of skill required of the worker are to be considered as a whole.
While greater clarity has long been desired by employers who struggle with classification questions, the guidelines may not be welcome relief. The guidelines place greater weight on employee classification and make the bona fide classification of an independent contractor more unlikely. This expansion of the definition of an employee is not surprising given the DOL's aggressive approach that employee misclassification deprives workers of important benefits such as overtime pay and workers' compensation. The new guidelines all but guarantee the critical oversight will continue, particularly in industries that rely heavily on independent contractor relationships.
Independent contractors can continue to be a worthwhile solution for many businesses. However, in light of the guidelines, employers will be wise to revisit independent contractor classifications and confirm that the relationships pass muster under the refined "economic realities" test.
On June 30, 2015, the Wage and Hour Division of the U.S. Department of Labor (DOL) released a proposed rule to update overtime regulations under the Fair Labor Standards Act (FLSA). Specifically, the proposal will update the definition that determines which white collar workers are eligible to receive overtime pay.
As the resident health care reform geek, I get questions from our clients every day regarding various articles they read or emails they received about the Affordable Care Act (ACA.) Most are very good questions (it’s a complex law), but all too often the question is coming from an email that was designed to scare them so the sender can sell them something. The one I find most absurd is the concept of Pay-or-Play. “You need to meet with us because we have a calculator that tells you if you need to Pay-or-Play!”
There is no law that strikes more fear in the hearts of HR Professionals than FMLA. While most of us agree with the concept of giving time off to employees to care for themselves and their family members, the plethora of forms, constantly evolving regulations and general employee confusion make it almost impossible to manage employee leaves in a smooth and consistent basis. On top of that, California has its own version…which, of course, has to work just a little bit differently.