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DOL: Most Independent Contractors Are Employees

Employee or independent contractor? This issue has been a contentious one for years, with many saying employers frequently misclassify workers as independent contractors to avoid paying them full income and benefits.

Screen Shot 2015-06-24 at 3.53.58 PMOn July 15, 2015, the U.S. Department of Labor attempted to clarify the law with a memorandum that stated that a majority of American workers currently classified as independent contractors should rightfully be categorized as employees under the Fair Labor Standards Act.

According to the DOL, the true test of employment status comes down to one key question in the FLSA’s economic realities test: Is the worker truly in business for him or herself? Many workers classified as independent contractors are not actually operating their own business, meaning that they rightfully qualify as employees under the DOL’s interpretation.

The DOL examined other facets of the economic realities test in the memorandum, including the nature of the work performed by the individual, the worker’s managerial skill, the depth of the worker’s investment in the business, special skills and initiatives required, the permanence of the relationship between worker and employer and the extent of the employer’s control.

According to the DOL’s interpretation, each of these factors plays a role in determining employment classification.

Though the DOL’s memorandum is not legally binding, it will likely have an impact on the courts, which often defer to agency opinions on legal regulations. Furthermore, this memorandum is a promising indication that the DOL is prepared to take action against employers who skirt the law and unfairly classify workers as independent contractors.

In South Carolina, where a four-part test is used to determine employee vs. independent contractor classification, workers would be wise to review their rights and ensure that they’re being classified correctly. Those who are misclassified as independent contractors are missing out on protections and benefits that they rightly deserve.

Wage and Hour Attorney Greenville SC
Have you been misclassified? If you need a wage and hour attorney in Greenville SC, contact the Law Office of W. Andrew Arnold at 864-242-4800.

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