Employee or Independent Contractor? U.S. Department of Labor Will Soon Weigh In

On Friday, June 5, 2015, Wage & Hour Division Administrator David Weil announced the United States Department of Labor will “very soon” release an administrator interpretation about the criteria needed for an employer to properly classify a worker as an independent contractor instead of an employee.  Weil declined to specify when, exactly, the guidance would be released but hinted at an “early summer” issuance.

Recent statements issued by the Obama administration and rulings by the National Labor Relations Board suggest the forthcoming DOL administrative interpretation may attempt to broaden the existing legal standard for employment, thus making it more difficult for employers to establish and maintain independent contractor relationships.  In addition, several recent high-profile lawsuits have challenged major companies that rely upon independent contractors, including FedEx and Uber.

U.S. DOL Administrator interpretations have historically been controversial.  A 2010 administrator interpretation that mortgage bankers were not exempt from overtime compensation under the FLSA administrative exemption was unsuccessfully challenged in the United States Supreme Court.

Weil’s statement about the forthcoming guidance on the definition of employment comes on the heels of the Department’s proposals last month to revise and “modernize” the “white collar” exemptions to overtime pay under the Fair Labor Standards Act.  These proposals, under current review by the White House, are expected to tighten, perhaps significantly, some overtime exemption requirements.

Employers of all sizes and industries across the board should closely monitor these potential changes in the employment landscape.  We will continue to provide updates on DOL administrator interpretations and rule proposals.