By
Jeffrey H. Ruzal of Epstein Becker & Green
On September 22, 2020, the U.S. Department of Labor (“DOL”) released its highly anticipated proposed rule for distinguishing independent contractors from employees under the Fair Labor Standards Act (“FLSA”).
When evaluating independent contractor status under the FLSA, courts have traditionally applied what is known as the “economic realities” test. The test varies slightly from circuit to circuit, and, perhaps, court to court, but courts generally consider the following factors on a non-exclusive basis: (i) the degree of control that the putative employer exercises over the workers; (ii) the workers’ opportunity for profit or loss, and their investment in the business; (iii) the degree of skill and independent initiative needed to perform the work; (iv) the permanence or duration of the working relationship; and (v) the extent to which the work is an integral part of the putative employer’s business. No single factor is dispositive, and the determination turns on a holistic assessment of the totality of the circumstances (i.e., the economic reality of the worker’s relationship to the putative employer).
