The Department of Labor released proposed regulations to help employers determine if a worker is an “employee” under the Fair Labor Standards Act (“FLSA”) or an "independent contractor." If an independent contractor is determined to be an employee, the change of status will have an impact on the labor laws, payroll-tax requirements, income-tax laws, and laws governing employee benefits.
The proposed regulation would determine a worker’s status based on if the worker is economically dependent on the employer for work or is in business for himself or herself.
Two core factors being considered are:
Additional factors will be available if the core factors cannot make a determination. Additional factors may include (1) amount of specialized skill or training required (2) degree of permanence in the work relationship and (3) if the work is part of an integrated unit of production.
The Department of Labor is currently taking comments on the proposed regulations. An expected date for the final regulations is not available at this time, but once finalized, employers should review all independent contractors to determine if they would be considered an employee.