Independent Contractor V. Employee

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DOL Again Changes It's Position On What Is An “Independent Contractor”

Effective March 11, 2024, the Wage and Hour Division, Department of Labor will once again modify its regulatory guidance and will replace guidance that has been in place since 2021 in regard for determining employee or independent contractor classification under the Fair Labor Standards Act (FLSA). According to the DOL, the analysis will be “more consistent with judicial precedent and the [FLSA’s] text and purpose.” See 89 FR 1638.

The DOL’s guidance spans about 268 pages and 126048 words, all in an effort to once again explain what the DOL believes is and is not an independent contractor for purposes of the FLSA.

Generally speaking, the FLSA provides statutory requirements for minimum wage, overtime, and record keeping requirements for workers that are employees of an employer. The FLSA does not provide and has never provided a definition of “independent contractor.” The FLSA defines “employee” and “employer” in a tail-chasing, circular fashion, which has caused challenges for the courts, the DOL, hiring entities, and workers since the enactment of the FLSA near 100 years ago.

Under the FLSA, The term “employer” “includes any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency, but does not include any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization.” 29 U.S.C. § 209(d). The term “employee” – as applicable to most private hiring entities – is defined as “any individual employed by an employer,” and “employ” is defined to “include[ ] to suffer or permit to work.” Id. at § 209(e)(1), (g). So, if a person is “employed by an employer” and is permitted to work, the person is an employee.

The DOL regulations except from the definition of “employee” any individual who volunteers to perform services for a public agency, provided that “(i) the individual receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered; and (ii) such services are not the same type of services which the individual is employed to perform for such public agency.” Id. at § 209(d)(4)(A).