The U.S. Department of Labor (DOL) announced it has issued a new opinion letter that addresses compliance issues related to the Fair Labor Standards Act (FLSA).
This letter responds to a request on behalf of a particular virtual marketplace company (VMC). It concludes that the workers who provide services to consumers through this specific company’s virtual platform are independent contractors, not employees of the company. To make this determination, the Department’s Wage and Hour Division (WHD) applied its longstanding and unchanged six-factor balancing test, derived from Supreme Court precedent:
- 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; and
- The extent of integration of the worker’s services into the potential employer’s business.
Although the DOL found that workers for this particular VMC met the legal requirement to be considered independent contractors, small differences could have altered the outcome, such as the VMC exerting greater control over how work was performed or limiting their ability to work for similar firms. The analysis is always handled on a case by case basis, the DOL stated that it “does not determine employee status by simply counting factors but by weighing these factors in order to answer the ultimate inquiry of whether the worker is ‘engaged in business for himself or herself’ or ‘is dependent upon the business to which he or she renders service.”
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