Department of Labor, Administrator’s Interpretation on Worker Classification

The Wage and Hour Division of the Department of Labor provided recent guidance in determining classification of workers.  The WHD says a business “‘suffers or permits’ an individual to work if, as a matter of economic reality, the individual is dependent on the entity.”  The factors of the economic reality test include:

(a) the extent to which the work performed is an integral part of the employer’s business;

(b) the worker’s opportunity for profit or loss depending on his or her managerial skill;

(c) the extent of the relative investments of the employer and the worker;

(d) whether the work performed requires special skills and initiative;

(e) the permanency of the relationship; and

(f) the degree of control exercised or retained by the employer.

These factors should be analyzed in relation to one another and that no factor should be weighted more. In particular, that the “control” factor should not be given more weight. If you have questions or want to discuss how your relationships with your workers are structured, give us a call at Wilson Worley, PC.