DOL Squeezes in on Business Regarding Employees vs Contractors

Group of workers people. Isolated on white background
On Wednesday the Department of Labor Wage and Hour Division, gave their guidance on what worker's classifications should look like.  They seem to be suggesting more businesses should be designating workers as employees instead of independent contractors.
The guidance follows heated debates throughout the country as some companies, such as ride-sharing tech company Uber, have been accused of misclassifying workers as a way to keep labor costs down.
“The guidance is going to make it harder to classify workers as independent contractors,” said Beth Milito, senior executive counsel of the National Federation of Independent Business.  Other business leaders feel this is a one-sided interpretation of the law that will penalize employer's legitimate use of contractors. 
Businesses are to look at various factors that determine whether a person is an independent contractor or an employee.
1. How much control does the employer have over the person?
2.  Is the work being done by the worker an integral part of the employer's business?
3.  Does the Worker’s Managerial Skill Affect the Worker’s Opportunity for Profit or Loss?
4.  Is the relationship between the worker and the employer permanent or indefinite?
5.  Is the work peformed require special skill and initiative?
6. How Does the Worker’s Relative Investment Compare to the Employer’s Investment?
These factors are used collectively to determine if the worker is economically dependent on the employer, which either means they are an employee of the organization or they are in business for themselves as an independent contractor.   To review and get more specifics regarding what is the definition of an employee or independent contractor, our HR consultants are more than happy to review the situation.   Unfortuantely, you might not like what you hear.
If you are using contractors on a consistent basis, and/or you have more than 50 employees (check out ACA Compliance) it would be wise to review with a labor attorney where you are regarding compliance. Even though the definition of an employee has broadened and it is tougher to work within the new and ever changing definition of contract labor, making adjustments in your process or structure may be enough to give you a fighting chance with the Labor Department if they come calling.   
For more specifics check out Lexology and get a legal perspective. 
Subscribe to our Newsletter
Please enter your first name
Please enter your last name
Please enter your email
Invalid Input


Main-line:    704-375-1112

Customer Service
Ext 104
Ext. 105
Ext. 107
The Buck Stops Here!
Ext. 103



Contact us

Hamilton Edwards, Inc.
9101 Southern Pine Blvd, Ste 320
Charlotte, NC 28273

[email protected]


Follow Us


For immediate assistance call us at:


Copyright © 2020 Hamilton Edwards. All rights reserved.