The Department of Labor (DOL) this week announced that its Wage & Hour Division (WHD) has written a new opinion letter (FSLA2019-6) as a response to a request for DOL guidance on independent contractor status of workers who participate in the “virtual marketplace” economy. This commonly would include on-demand workers whose services are facilitated by internet-based applications. Familiar examples of such workers include drivers for Uber and Lyft transportation services. Such determinations can affect the worker’s eligibility for company benefits, including retirement plan participation and health benefits.
The opinion letter indicates that whether a worker is considered an employee of the company or an independent contractor is determined by a number of factors. One key factor is the degree to which a worker is economically dependent on or economically independent of an employer.
This opinion letter addresses the particular fact pattern of the applicant. It also identifies a number of factors that may determine whether a worker should be considered an independent contractor or an employee. The WHD examined the following factors to arrive at its opinion.
- The nature and degree of the potential employer’s control
- The permanency of the worker’s relationship with the potential employer
- The amount of the worker’s investment in facilities, equipment, or helpers
- The amount of skill, initiative, judgment or foresight required for the worker’s services
- The worker’s opportunities for profit or loss
- The extent of integration of the worker’s services into the potential employer’s business
An opinion letter is an official, written opinion on how a particular law applies in specific circumstances presented by the individual person or entity that requested the letter. The DOL news release states that this opinion letter addresses compliance issues related to the Fair Labor Standards Act.