Tag Archives: Tests

04.13.17
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Are Independent Contractors Exempt from the FLSA?

hurry-FLSA-independent contractor -2119711_1920Sort of. The Fair Labor Standards Act (FLSA) covers only employees, not independent contractors. The FLSA’s requirements on minimum wage and overtime, therefore, do not apply to independent contractors.

But wait, dear reader, don’t click away quite yet! There’s more! The real question is whether your independent contractor is really an independent contractor.

The question of Independent Contractor vs. Employee is determined under the FLSA by applying an Economic Realities Test to the facts of the relationship, not by deferring to how the parties have characterized they relationship.

The Economic Realities Test evaluates whether the worker is economically reliant on the company for which services are being provided, as opposed to in business for himself/herself.

I have written about the Economic Realities Test here, walking the reader through the various factors that courts and the DOL use to determine Who Is My Employee? under the FLSA.

The bottom line: A true independent contractor is not covered by the FLSA, but an Economic Realities analysis must be applied to determine whether a worker is truly an independent contractor.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

04.03.17
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What is an ABC Test? (and why these tests are a problem)

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As we know, there are a variety of tests used to determine Independent Contractor vs. Employee, and the proper test varies depending of the law being applied.

Most of these tests are balancing tests. A variety of factors are considered, and no single factor is determinative.

ABC tests, however, are different. ABC tests start with a presumption that a contractor is an employee, then requires a company to prove each of three factors to protect a contractor’s status as a contractor.

ABC tests tend to apply only to state unemployment coverage laws and, less commonly, to
state workers’ compensation laws. Continue reading →

03.30.17
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Four Ways to Give Up Control and Protect Independent Contractor Status

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Retaining control over how independent contractors do their work can sink an otherwise legitimate independent contractor relationship.

Fortunately, steps can almost always be taken to give up aspects of control that do not hurt the business case for using a contractor instead of an employee. Companies need to be thoughtful and proactive, though, in evaluating and modifying these relationships — before they are challenged in a misclassification claim.

Here are four aspects of control you may be able to relinquish in your relationships with independent contractors: Continue reading →

03.09.17
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Joint Employment Tests Are All Wrong, Says Federal Appeals Court

Fourth Circuit Adopts More Liberal Joint Employment Test Than NLRB’s Browning-Ferris Decision

IMG_1045(This article originally appeared in Corporate Counsel on March 1, 2017. Click here to view the original.)

Are 59 years of joint employment rulings all wrong? Yes, says a federal appeals court in a landmark Fair Labor Standards Act (FLSA) decision issued in late January.

Relying on a 1958 Department of Labor (DOL) regulation, the Fourth Circuit Court of Appeals has rewritten the test for joint employment, defining the concept so expansively that every outsourced and staffing agency relationship might be deemed joint employment under the FLSA. The decision in Salinas v. Commercial Interiors, issued unanimously by a three-judge panel (all Obama appointees), takes a more radical position on joint employment than even the NLRB took in its controversial 2015 Browning-Ferris decision.

The Court of Appeals concludes that everybody – including the DOL itself – has been misinterpreting the DOL’s joint employment regulation for 59 years.

Is that possible? Can the Court literally mean that? Or is this an example of the adage, “bad facts make bad law”? The facts in Salinas suggest there was probably a joint employment relationship under any test. It remains to be seen how this test will be applied and whether decades of court decisions and DOL guidance will truly be disregarded.

Meanwhile, employers in North Carolina, South Carolina, Maryland, Virginia, and West Virginia are immediately and directly impacted, since these are the states that the Fourth Circuit covers.

What Happened?

Continue reading →

03.06.17
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D.C. Court Doesn’t Fall for NLRB’s Lollipop Trick, Deems FedEx Drivers Independent Contractors

img_1042Act I, Scene 1

Location: Anywhere, USA

Boy: Can I have a red lollipop?

Mom: No, we’re eating dinner in half an hour.

Boy: (eats blue lollipop)

Mom: What are you doing? I said no!

Boy: I only asked about the red lollipop.

Too cute by half, right? Mom is no fool and easily sees through the simple trick. The boy is grounded.

Act I, Scene 2

Location:  D.C. Court of Appeals

NLRB: These FedEx drivers in Massachusetts are employees, not independent contractors.

D.C. Circuit (2009): No, they’re independent contractors.

NLRB: Ok, Connecticut then. The FedEx drivers in Connecticut are employees, not independent contractors.

D.C. Circuit (2017): Are you kidding me? We already ruled they are independent contractors.

NLRB: Last time I only asked about the drivers in Massachusetts.

Continue reading →

02.20.17
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Boom? Is the California Supreme Court About to Blow Up the Test for Independent Contractor Relationships?

california-independent-contractor-dynamex-boomThe California Supreme Court may be about to rewrite the test for Who Is My Employee? under California wage and hour law.  [Note 4/30/18: It just happened. Read more here.]

Independent contractor relationships that have stood the test of time may be in jeopardy.  And I don’t mean the (mildly?) entertaining Alex Trebek kind of Jeopardy. We’re talking real economic upheaval and uncertainty — worse than Schwarzenegger taking over Celebrity Apprentice.

Here’s the issue: Continue reading →

01.10.17
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What is the Economic Realities Test?

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The Economic Realities Test seeks to determine whether, as a matter of economic reality, the worker is reliant on the hiring party, or is in business for him/herself.

[UPDATED 10/9/2021, 3/15/22:  See Notes in red, below.]

The Fair Labor Standards Act (FLSA) uses an Economic Realities Test to determine whether a worker is a contractor or an employee.  If the worker is an employee under this test, then the federal minimum wage and overtime rules apply, subject to any exemptions.  This test is also used to determine who is an employee under the Family and Medical Leave Act (FMLA). Continue reading →

12.29.16
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What are Right to Control Tests?

marionetteLet’s start with some basics.  Although there are many tests for determining whether a worker is an employee, the most common types of tests are Right to Control Tests.

These tests seek to determine who has the right to control the means and manner by which work is performed.  If the company has more control, the worker is generally an employee.  If the worker has more control, the worker is more likely an independent contractor.  That’s an overstatement, but it captures the gist of the issue.

Continue reading →