The Wage and Hour Division of the United States Department of Labor (“DOL”) recently issued Administrator’s Interpretation No. 2015-1, reinforcing the department’s view that most workers are correctly classified as employees, rather than independent contractors. A copy of the Interpretation is available at http://www.dol.gov/whd/workers/Misclassification/AI-2015_1.htm.

 

The DOL refers in the Interpretation to the six traditional “economic realities” factors to determine whether a worker is in business for himself or is an economically dependent employee:

(1)       Is the work an integral part of the employer’s business?

(2)       Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?

(3)       How does the worker’s relative investment compare to the employer’s investment?

(4)       Does the work performed require special skill and initiative?

(5)       Is the relationship between the worker and the employer permanent or indefinite? and

(6)        What is the nature and degree of the employer’s control?

 

However, the Interpretation uses the phrase economically dependent more than 20 times, focusing on the economic dependence of the worker on the employer, rather than on a “mechanical application” of economic realities factors.  The Interpretation concludes that “[u]ltimately, the goal is not simply to tally which factors are met, but to determine whether the worker is economically dependent on the employer (and thus its employee) or is really in business for him or herself (and thus its independent contractor).”