Situation Report | September 28, 2020
The U.S. Department of Labor (DOL) has issued a proposed rule to determine whether a worker is an employee under the Fair Labor Standards Act (FLSA) or an independent contractor.
HCA members should take note of the proposal. It aims to help an agency determine its obligations depending on whether an individual performing work is an employee covered by the FLSA or an independent contractor.
In the proposed rule, DOL would:
- Adopt an “economic reality” test to determine a worker’s status as an FLSA-classified employee or an independent contractor. The test considers whether a worker is in business for himself or herself (independent contractor) or is economically dependent on a putative employer for work (employee).
- Identify and explain two “core factors,” specifically: the nature and degree of the worker’s control over the work; and the worker’s opportunity for profit or loss based on initiative and/or investment. These factors help determine if a worker is economically dependent on someone else’s business or is in business for himself or herself.
- Identify three other factors that may serve as additional guideposts in the analysis including: the amount of skill required for the work; the degree of permanence of the working relationship between the worker and the putative employer; and whether the work is part of an integrated unit of production.
- Advise that the “actual practice is more relevant than what may be contractually or theoretically possible in determining whether a worker is an employee or an independent contractor.”
Comments on the proposed rule will be accepted until October 26, 2020.