I have recently blogged about new exemption regulations being proposed.  Well, that is not the only regulatory initiative coming down the pike.  The USDOL is about to release guidance on the very confusing and thorny issue of when an individual is an independent contractor.  The agency will be issuing another of its “famous” white papers or an “administrator interpretation.”

The head of the WH Division, David Weil, stated that the interpretation will contain “a very clear set of criteria.” He intimated that the criteria will examine (as do federal courts on these issues) “a careful consideration of the economic realities and multiple aspects of the relationship.”  No specific time frame was announced but it appears that the guidance will come out in the summer.

Copyright: aleutie / 123RF Stock Photo
Copyright: aleutie / 123RF Stock Photo

The “problem” for the agency is that misclassified workers are not covered by the FLSA protections of minimum wage or overtime.  The agency believes that this is a “serious problem” not only for these people but for the entire economy.

The agency, for years, would issue opinion letters in response to factual scenarios and posed legal questions (which provide an astronomical amount of instructive guidance) but ceased doing that in 2010 when it started issuing administrator interpretations and announced it would no longer provide responsive opinion letters.

The agency now believes that issuing these interpretations provides more definitive guidance than answering fact specific questions posed in requests for opinion letters.  Through so doing, the agency collects the various cases that have issued on the topic, as well as looking at the Opinion Letters that have issued, and comes to a “reasoned” overview of the DOL stance on a given topic.  Fact-based responses to individual requests might produce skewed results, in the DOL’s view.

The Takeaway

I daresay that the administrative interpretation will mirror the abundant case law on “economic realities,” which is the doctrine that federal courts have utilized for decades in analyzing these questions.  That is probably a good thing, as opposed to analyzing it through the prism of, say, the A-B-C test which is a more mechanical approach.

The most crucial element to be set forth in the interpretation, I bet you, will be whether the alleged independent contractor has other business/clients.  In “economic reality” terms, this means that the putative contractor can survive the termination of any particular, discrete relationship and that the economic reality is that he is not dependent on the alleged employer under scrutiny.

If that is the case, then really nothing will have changed, because in the IC cases I handle/defend, that is always the focus!