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Independent Contractor Misclassification Presents DOL/IRS Dual Threat

In a September 10 article for The Legal Intelligencer, we examined the Department of Labor's (DOL) recent interpretation of how the Fair Labor Standards Act (FLSA) applies to the misclassification of independent contractors.

Important to  note that the DOL Administrator David Weil's interpretation (AI), "concludes that 'most workers are employees under the FLSA,'" and we go on to examine how this may impact employers. Some quotes from the article:

  • "While the AI sets out a multifactored test to determine whether a worker qualifies as an employee under the FLSA, it almost singularly focuses on a worker’s economic dependence on the business in question. Simply stated, according to the DOL, if a worker is economically dependent on a business, that worker is an employee of that business."
  • ​"The ability of employers to assess worker status will be complicated by the fact that the IRS uses a different test to assess the same question. As confirmed by a fact sheet released by the IRS in August, the test used by the IRS is less broad than the AI’s test, and focuses on the issue of control, not economic dependence. It is unclear whether the broader DOL test will drive, as a practical matter, employment tax assessments by employers and the government."

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Disclaimer: This post does not offer specific legal advice, nor does it create an attorney-client relationship. You should not reach any legal conclusions based on the information contained in this post without first seeking the advice of counsel.

About the Author

Andrea M. Kirshenbaum is the Chair of the Firm's Wage and Hour Practice Group, a Principal in its Employment & Employee Relations Practice Group, and a member of the Firm's Appellate Department. She defends employers nationally in federal and state court litigation involving all major employment statutes, represents them in related government investigations, and counsels them proactively on compliance with these statutes.

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