The government’s crack down on businesses that misclassify employees as independent contractors is increasing, especially after the many complaints filed to the U.S. Department of Labor.
Construction Dive reports that David Weil, administrator of DOL’s Wage and Hour Division, released a memo to help businesses understand how employees and independent contractors differ.
“The memo does not change any laws or requirements,” the article says. Instead, it clarifies how to use an “economic realities” test of six items, which the government uses to determine whether a worker is economically dependent on the employer or is self-employed.
Questions to consider are:
- Is the work an integral part of the employer’s business?
- Does the worker need managerial skill to determine his or her profit or loss?
- Is the worker’s relative investment on a project greater than the employer’s?
- Does the work performed require special skill and initiative?
- Is the relationship between the worker and employer permanent or indefinite?
- What is the nature and degree of the employer’s control?
Construction industry reporter Sharon O’Malley goes in depth for each of the six categories.