02.16.26
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Candy Laxatives and Verbal Diarrhea: There is No New Independent Contractor Rule – Yet

A daycare teacher in St. Charles, Illinois, was arrested this month after she allegedly gave the children candy-flavored laxatives. The plan, apparently, was to cause them to get diarrhea, which meant they would have to be sent home. The teacher’s motivation? She was overwhelmed at work. Fewer kids means less work.

I would counsel against this. If overwhelmed at work, there are generally better options than making a bunch of kids get watery poops. But what do I know?

A client last week alerted me to a mess of a different type. She received a flyer from an HR training firm, offering (for a fee, of course) to train HR professionals and lawyers on the “New Rule Issued by the Department of Labor” on independent contractor classification. Failure to comply with this rule, they warned in the flyer, could result in “the IRS penalizing you for back income taxes, FICA and states going after you for unpaid income taxes, workers compensation premiums and unemployment payments.”

I’d say there’s just one problem here, but that’s not true. So much of this is wrong.

First, there is no new DOL rule on the test for independent contractor classification. The DOL has indicated its intent to propose a new rule at some point in the near future. The proposed rule, whenever it is prepared, would then have to be published and go through a public comment period. Even if a proposed rule were to be released tomorrow, we are many months away from any new rule being finalized and implemented.

The current status of any proposed, not-yet-published, possible rule is here, where the DOL indicates that “The Department intends to rescind the 2024 IC rule and is considering how it will proceed with respect to independent contractor classification under the FLSA employee or under the FLSA.” Nothing has happened yet.

Second, even if the DOL does publish a new rule (which can only happen after a notice-and-comment period), that rule will have no effect on federal or state taxes, withholdings, workers compensation premiums, or unemployment. The DOL rule would impact only the determination of employee status under the Fair Labor Standards Act (FLSA), which governs when workers must be paid a minimum wage and overtime. The DOL has no oversight or jurisdiction over any of those other laws.

Other laws — and other tests — determine whether someone is an employee for federal tax purposes, and the states have their own laws to determine whether someone is an employee for state law tax purposes, workers compensation purposes, and unemployment insurance purposes.

It is true that misclassifying a worker can result in all of these bad outcomes, but a new DOL rule would have no effect on any of them. Companies using independent contractors should remember that there are a myriad of standards for determining whether someone is an employee or an independent contractor, and these tests all exist simultaneously and apply to different laws at the federal and state level. A worker can be an employee under some laws and an independent contractor under other laws, at the same time. (Fun!)

Apparently anyone can advertise to speak on topics with legal significance, even if they’re just plain wrong on what they plan to say.

If all of this seems overwhelming, just take a deep breath and let’s wait for the DOL to propose a new rule, which undoubtedly will make it easier to classify someone as a contractor under the FLSA. In the meantime, if you still feel overwhelmed, please do not resort to giving children diarrhea.

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© 2026 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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02.02.26
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The Leech & Vampire Business: The Law — Not the Parties — Decide Who is an Employee

In the early 1800s, Parisian doctor François Broussais popularized the use of leeches for bloodletting. Vampires, apparently, were going out of fashion, and besides, leeches can eat 10 times their weight in blood, which seems more efficient than vampires anyway.

By the 1830s, France was importing 40 million leeches a year for medical use. Someone was getting rich from the leech trade.

Almost 200 years later, the use of leeches is reserved for freaking out kids on camping trips. We have better ways of treating illness now, but blood collection is still important.

In fact, there is a whole industry based on blood collection (or, for those daring enough to proceed without spellcheck, phlebotomy).

If phlebotomy is your business, then your phlebotomists are your employees, ruled a district court in Michigan a few weeks ago. The case involved a group of blood collectors who were classified as independent contractors. They signed IC agreements and were paid in gross.

They sued under the Fair Labor Standards Act (FLSA), alleging that under the law, they were really employees and should have been paid overtime. The court agreed, with no trial, granting summary judgment to the plaintiffs. Ouch.

The court applied an Economic Realities Test, and found that the factors decisively pointed toward employee status for the phlebotomists. Key facts that weighed in favor of employee status included:

  • The permanency of the relationship: They worked regularly for the defendant for months at a time.
  • Skill required: No special certification is needed to draw blood (see, e.g., resumes of leeches, vampires).
  • Lack of investment in equipment: The phlebotomists didn’t bring or invest in their own equipment.
  • Opportunity for profit or loss based on managerial skill: Nope. They were paid based on hours worked.
  • Right to Control: The work was largely directed by the defendant, and the phlebotomists were required to sign non-compete agreements, which prevented them from operating their own businesses in phlebotomy.
  • Integral part of the business. Well, duh. It’s a phlebotomy business.

The case is a good reminder that it doesn’t matter what the parties call the relationship. The law dictates whether a worker is an employee or an independent contractor, and you can’t agree to contract out of the law.

What a bloody mess.

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© 2026 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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01.20.26
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No Cordwainers Allowed: California Grants Non-Employee Drivers the Right to Organize

The first labor union in the United States was the the Federal Society of Journeymen Cordwainers, founded in 1794. What is a cordwainer? I had to look that up too, so I’ll save you the trouble.

It’s a shoemaker who makes new shoes from new leather, in contrast to a cobbler who repairs shoes. There aren’t a lot of cordwainers around anymore that I know of. Or maybe there are but they go by a name that sounds less weenie-ish.

There are, however, a lot of rideshare drivers. And the State of California thinks they would like to organize too.

But there’s a problem with that. The National Labor Relations Act protects employees, not contractors. When independent businesses band together to set prices, that’s called price fixing, and it presents all sorts of antitrust problems.

A new California law tries to get around these pesky legal problems.

The Transportation Network Company Drivers Labor Relations Act, AB 1340, allows rideshare drivers the right to collectively bargain, using a process to be overseen by the Public Employment Relations Board (PERB).

Rideshare companies must submit a list of eligible drivers every quarter, and these companies are required to negotiate in good faith with the yet-to-be-formed drivers’ group.

But they’re not “unions,” I suppose, even thought they walk like a union and quack like a union.

The statute is long and detailed. It has lots of procedures.

In 1805, the cordwainers’ union was alleged to be a coercive and violent organization, allegations that arose after a cordwainer on strike threw a potato at a scab. The potato broke a window.

Let’s hope the whole rideshare law thingie goes more smoothly, and we’ll see how this actually works in practice. A possible bad omen: The statute says nothing about the unauthorized use of potatoes.

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© 2026 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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11.10.25
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New Test May Sting Companies with Independent Contractors in Minnesota

Me in Minnesota in 2024, after running around a lake with a name I can’t pronounce

Here are a few fun facts about Minnesota:

  • The official state beverage is milk
  • The official state bee is the rusty patched bumblebee
  • The official state muffin is blueberry

Who knew the blueberry muffin lobby held such sway?

A less fun facts about Minnesota is that the state has made it really hard to be an independent contractor in the construction industry.

In 2024, the state legislature amended its independent contractor classification law to impose a 14-part test. In reality, it’s a 27-part test because some of the parts have mandatory subparts.

If you’re trying to engage an independent contractor in the construction industry in Minnesota, be extra careful. Construction includes commercial and residential improvement but excludes most landscaping services.

A collection of trade groups challenged the law, arguing that it was unconstitutionally vague and that its penalties (compensatory damages plus up to $10,000 per violation) were excessive. They sought a preliminary injunction to suspend the law while they could mount a more substantive challenge.

A district court denied the motion, and then last month the Eighth Circuit Court of Appeals affirmed. The new test therefore remains in place. The Eighth Circuit expressed skepticism about each of the trade groups’ arguments and ruled that they were unlikely to succeed on the merits.

This case is a reminder that the independent contractor tests vary widely. There are different tests for different laws in different states and even within different industries.

Companies using independent contractors should check the laws of their state and industry before assuming that their contract will be sufficient to support contractor status.

A miss here could be painful. Like the sting of a rusty patched bumblebee. If that kind even stings. But for today, let’s assume it stings. And stings hard.

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© 2025 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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10.27.25
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Beware of Bright Shiny Objects: Home Health Care Company Gets Whacked in Misclassification Claim

Alabama jewelry store owner Slater Jones owns a two-carat diamond. That might not seem surprising, but stay with me here. Jones keeps the diamond in his eye. Literally, in his eye.

You see, Jones lost his right eye to illness. Rather than living with a boring old prosthetic eye that looks like, well, an eye, Jones engaged eye prosthetic expert John Lin to create a custom artificial eye from a diamond.

Having a diamond for an eye may seem a bit gaudy, but I guess if you’re in the jewelry business, you may as well just go for it.

Those in the home health care business, on the other hand, should not just go for it — especially if “it” is classifying in-home health aides as independent contractors.

In a settlement finalized earlier this month, California Attorney General Rob Bonta secured a $9.5 million settlement against the individual owners of a home health care company for misclassifying its workers in violation of California law. In this case, the owners appears to have operated the home health agency as a d/b/a without having incorporated. Oopsie. The settlement included another $1.5 million against a different incorporated home health care entity and its family of owners.

The settlement also prohibited all of the defendants from classifying their aides as independent contractors in the future.

We have seen a lot of recent cases brought against home health care companies that classify their workers as independent contractors. This settlement is a stern warning that home health care companies choosing that model need to be extremely cautious.

Because this case was brought by the State, some of the protections we often recommend, like individual arbitration agreements with class action waivers, provide no protection. This case and the settlement also serve as a reminder that individuals can be held liable for intentional misclassification.

The claims brought against the agencies focused largely on California’s Unfair Competition Law (UCL). Misclassification allegations under the UCL typically claim that the wrongdoer gained an improper advantage in the marketplace by unlawfully classifying employees as independent contractors.

Treating in-home aides as contractors may seem like a bright shiny object worth pursuing. But that sparkle you see is no diamond. It’s just the gleam in the eye of the State Attorney General, preparing to count the cash from another misclassification settlement.

Classify wisely, my friends.

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© 2025 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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10.13.25
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DOL Reminds Employers that Joint Employment Comes in Two Flavors – Vertical and Horizontal

Foie gras ice cream anyone?

We all know that ice cream comes in many flavors. But some are particularly unusual. For example, a French company sells ice cream with flavors like foie gras, caviar, mustard, and truffle. Presumably, those come in separate scoops.

A U.S. company sells deviled egg custard with smoked back team ice cream. That’s a firm no for me. A New York gelateria offers wasabi. Again, pass.

Less fun fact: Joint employment also comes in two flavors — vertical and horizontal.

Vertical joint employment is when the employee of one company performs services for the benefit of a second company, like in a staffing agency scenario. That’s probably what you think of when you consider joint employment.

But there’s also horizontal joint employment, and that flavor was the subject of a recent DOL opinion letter (FLSA 2025-05). The letter reminds us that even under the current administration, the concept of joint employment is alive and well.

Horizontal joint employment occurs when an employee works for two separate companies in the same week, but those companies share ownership, management, scheduling responsibility, or other significant areas of coordination.

Under the facts addressed in the opinion letter, a hostess worked at both a restaurant and a members-only club. She worked fewer than 40 hours per week at each, but worked more than 40 hours per week combined.

The restaurant and the club were on the same property, shared a kitchen, shared some managers, coordinated schedules, and were “operationally integrated with each other,” as the DOL put it. The employee also sometimes performed work for the club while clocked in at the restaurant.

While the locations were run by separately incorporated entities and had separate upper management teams, the overlap in operations was enough for the Acting Wage and Hour Administrator to conclude that the employee was jointly employed. That means her hours had to be combined for purposes of determining her eligibility for overtime. If she worked more than 40 hours combined for the two entities, she would be due an overtime premium. The two joint employers would have to determine how to allocate the premiums between them, and if they failed to do so, both would be jointly liable.

This opinion letter is a good reminder not to overlook the potential for horizontal joint employment. It’s a lesser known flavor of joint employment, but just as loaded with cream and sugar.

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© 2025 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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09.29.25
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Clearing the Fog? New Joint Employer Test Is Being Considered for Franchisors

I took last week off work to visit Asheville. The first morning, we woke up at 5 am for a sunrise hike at Craggy Pinnacle, along the Blue Ridge Parkway. This was our view at the top.

Fortunately, the fog burned off after an hour or so. We waited and were rewarded with some spectacular views. Our 7-month old puppy Louie was just happy there were other dogs at the top to play with. Here he is, admiring the view.

The lesson, of course, is to be patient and sometime the fog will clear. (Or check the weather report?)

Franchisors are hoping for the same reward, through the proposed American Franchise Act, introduced in the House in September and now before the House Committee on Education and Workforce.

The bill, which has at least some bipartisan support, would change the definition of joint employment under the NLRA and FLSA for franchisee-franchisor relationships.

The bill would establish that a franchisor can be a joint employer only if it exercises “substantial direct and immediate control” over one or more “essential terms and conditions of employment of the employees of the franchisee.”

“Essential terms and conditions of employment” means wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.

To be a joint employer, the franchisor would have to control these terms with respect to individual employees. Setting baseline standards and brand guidelines would not create joint employment.

The risk of joint employment liability is an ongoing concern for franchisors. The franchise business model requires a level of control to ensure brand consistency and a uniform customer experience across locations. The American Franchise Act, if passed, would help to protect the franchise model and establish clear guidelines for what level of control is needed to create a joint employment relationship.

We’ll see if Congress decides to lift the fog.

Here’s a better view from the hike:

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© 2025 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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09.02.25
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Not Buying It? New Jersey DOL Might Back Off From Tougher IC Test

If you’re a frequent online shopper and reading this post from Japan, you’re probably familiar with the online Japanese flea market app Mercari. What I mean is, I never heard of it either.

Mercari, though, made big news last month when it took the controversial step of banning the sale of prenatal photos on its website. Why would anyone buy someone else’s prenatal photo? For scamming purposes, apparently. And that’s what led Mercari to take action.

The practice of “ninshin sagi” (a phrase that autocorrect vehemently tried to reject) means pregnancy fraud. It occurs when a woman tries to blackmail a male partner into paying money for a supposed pregnancy or to get an abortion. Mercari wants no part in the scheme, so if you want to buy photos of someone else’s uterus, you’ll have to look elsewhere.

New Jersey lawmakers are also saying to look elsewhere, but their ire is aimed at the NJ Department of Labor. As we discussed here, the NJ DOL issued a proposed rule that would change the state’s test for determining independent contractor status. The public comment period for the rule has closed, and now the NJ DOL needs to consider each comment and decide what to do.

Several NJ lawmakers, however, are urging the DOL to back off, and the sentiment is bipartisan. The proposed rule, they say, is not consistent with the current state of NJ court decisions or the NJ statute. (I agree!)

There is no timetable for the NJ DOL to issue a final rule. Or the NJ DOL may abandon its effort to adopt the rule. It’s also possible that lawmakers would enact legislation to block the proposed rule.

Companies with independent contractors in NJ should keep an eye on what happens here. The proposed rule would make NJ’s current ABC Test much stricter and harder to meet, thereby making it very difficult to maintain independent contractor status in NJ.

But at least in New Jersey you can still buy online uterus pics.

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© 2025 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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08.18.25
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Phantom or Real? Federal Bill Would Create New Joint Employment Test

For three hours each night, a policeman appears out of thin air in a busy park in Seoul, South Korea. His presence has, according to police data, reduced crime in the park by 22%. The policeman, however, has never arrested anyone, and he doesn’t even move around the park.

That’s because he’s a hologram.

The police chief attributes the program’s success to “citizens’ perceived safety,” although I’m not sure why anyone would perceive themselves safer in the presence of a hologram. Maybe I should not be so cynical. If it works, it works.

A new federal bill seeks to increase employers’ perceived safety, but without holograms.

The Save Local Business Act, H.R. 4366, would amend the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA) to create a uniform test for joint employer status. By adding a new joint employer test to the statutes, Congress would prevent the NLRB and DOL from trying to change the test every time there’s a new party in the White House.

The Act is a pro-business bill. If it passes, joint employer status would be much harder to establish.

Under the proposed text, joint employer status could exist “only if each employer directly, actually, and immediately, exercises significant control over the essential terms and conditions of employment of the employees of the other employer.”

“Essential terms and conditions” would mean, for example, “hiring such employees, discharging such employees, determining the rate of pay and benefits of such employees, supervising such employees on a day-to-day basis, assigning such employees a work schedule, position, or task, or disciplining such employees.”

The bill is sponsored by James Comer (R-Ky.). It was introduced July 14, 2025. Previous versions of the bill were introduced in 2021 and 2023. Obviously, they failed.

With Republicans controlling the House, passage in the House seems possible, but the likelihood of getting 60 votes in the Senate is pretty remote.

So the bill, while it seems good for businesses, is probably the legislative equivalent of a Korean holographic police officer. It looks nice but exerts no real authority.

You can track the status of the bill here.

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© 2025 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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08.04.25
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Gone the Way of Westarctica: Tax Bill Changes 1099 Reporting Rules

(AI mapmaking is fun!)

Harshvardhan Jain served ably as the Indian ambassador to Westarctica. And Seborga. And Ladonia. He drove fancy cars with diplomatic plates, and he worked out of an embassy in Ghaziabad, India.

Now I know what you’re thinking. Ghaziabad must be a made-up place name, right? Sorry, no, Ghaziabad is a real place. But Westarctica, Seborga, and Ladonia are not. Jain was arrested recently for operating fake embassies for made-up nations, using his high-falutin’ status to defraud potential business partners. Allegedly.

Goodbye to Westarctica. We hardly knew you.

Same sentiments to the tax rule requiring businesses to issue an IRS Form 1099 to contractors receiving $600 or more in a tax year. Under the One Big Beautiful Bill, the threshold for issuing 1099s has been raised to $2000. The change goes into effect for 2026.

The effect will likely be that fewer contractors pay taxes on their earnings. Many contractors will figure that no one at the IRS is watching. And for the most part, they’ll probably be right.

The change is in Section 6041 of the Internal Revenue Code. If you look it up, you’ll see it. But don’t bother looking for Seborga on a map. You won’t see that anywhere — except maybe on Harshvarhan Jain’s business cards.

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© 2025 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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