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DOL issues guidance on proper classification of contractors

by | Aug 10, 2018 | Wage And Hour/Overtime


The U.S. Department of Labor Wage and Hour Division recently issued a field assistance bulletin (FAB) entitled “Determining Whether Nurse or Caregiver Registries Are Employers of the Caregiver.” While the bulletin focuses on nurses and other caregivers, it provides valuable insight into the proper classification of workers and independent contractors regardless of industry. It also indicates that the DOL will consider the totality of the circumstances when determining whether a worker should be considered an employee or an independent contractor.

The question of whether a worker is an employee or an independent contractor is a legal one. Courts generally rely on a multifactor test to make this determination, with the most commonly discussed factor being whether the company or the worker controls the details and performance of the work. The more that a company controls the work, the more likely the courts will deem that worker to be an employee.

The question being discussed in the FAB is whether a nurse or caregiver registry can classify its workers as independent contractors. The FAB indicates that it can, as long as it avoids becoming involved in or trying to control the relationship between the caregiver and the client.

The FAB goes on to detail a list of common business activities and how they could be factored into an overall determination of whether a particular worker should be considered an employee or a contractor. For example, caregiver registries cannot exercise control over independent contractors’ schedules or manage their work, except when setting initial appointments. A registry’s attempt to control a caregiver’s schedule or work would weigh on the side of the caregiver being an employee of the registry.

One interesting factor is how the registry’s fees are structured. If a registry charges fees that are based on the total hours the caregiver works, the registry could have an ongoing interest in ensuring that the caregiver works as many hours as possible. This weighs on the side of an employer-employee relationship, whereas one-time fees and administrative charges would not.

Other activities that registries and other employers should avoid if they wish to maintain an independent contractor relationship include:

  • Providing training or instructions
  • Evaluating performance
  • Requiring workers to notify the registry, rather than the client, of cancellations
  • Limiting work hours or the number of clients
  • Controlling the workers’ schedules or defining the scope of their work
  • Providing equipment or materials
  • Setting the pay rate, as opposed to merely advising on typical market rates
  • Prohibiting workers from working directly with clients without the registry’s involvement

Due in part to the gig economy, the employee classification law could change quickly. It’s best to have a relationship with an employment law attorney to ensure that your company is in compliance.

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