The issue of independent contractor is in the forefront of today’s legal scene, on numerous fronts. There is also an issue with changing technology and its impact on these thorny issues. Now, the USDOL has issued an Opinion Letter addressing this issue as concerns the so-called gig economy. The Opinion Letter focuses on individuals who work for a gig economy platform that links up service providers with clients; the Opinion Letter concludes that they are independent contractors.
The Opinion Letter used the six-factor test gauging the “economic realities” of whether workers were employees. The Opinion Letter concludes that the workers were not employees because they were not economically dependent on the business, which was labeled as a “virtual marketplace company that operates in the so-called ‘on-demand’ or ‘sharing’ economy.” The employer is in a class of smartphone/web-based businesses offering platforms that pair consumers with people who provide different kinds of services, such as Uber, the general labor app TaskRabbit and the cleaning app Handy.
The Opinion Letter staked out that an economic dependence on an employer is the “touchstone of employee versus independent contractor status.” The Opinion Letter examined this putative dependence by looking at the “control” over the worker; how permanent was the relationship; the “investment in facilities, equipment or helpers”; the “skill, initiative, judgment or foresight” that is used for the performance of the services; the person’s “opportunities for profit or loss” and whether the services performed were integrated into the business. The Opinion Letter concluded that analysis of the factors tilted against a finding of employee status.
The Opinion Letter concluded that the ostensible employer “does not appear to exert control” over the individuals but. Instead, gave them “significant flexibility. Tellingly, that also involved the person’s ability to look for/find other opportunities. The individuals also retained a “high degree of freedom” to go work for competitors. They were also not integrated into the putative employer’s referral business.
This is a major departure from the views that the Obama DOL espoused. This letter, this approach, is definitely more business friendly than the guidance from the predecessor administration. The Opinion Letter, which may be relied upon to give employers a good faith/safe harbor defense provides more flexibility for employers and gives guidance to businesses in structuring such arrangements to maintain the status of these individuals as “independent contractors.”
A good start….