DOL Narrows Definition of Independent Contractor

On July 15, 2015, an in an effort to curb the mis-classification of employees as independent contractors, the U.S. Dept. of Labor narrowed the definition of independent contract. The new definition focuses on the “economic realities” test, which looks at whether workers are economically dependent on the employer. Specifically, the 6 factors which must be considered in making this determination are as follows:

  1. The extent to which the work performed is an integral part of the employer’s business;
  2. The worker’s opportunity for profit or loss depending on his/her managerial skill;
  3. The extent of the relative investments of the employer and the worker;
  4. Whether the work performed requires special skills and initiative;
  5. The permanency of the relationship; and
  6. The degree of control exercised or retained by the employer.

Each factor must be analyzed and no single factor is determinative.