Several months ago, the US Department of Labor (DOL) proposed a rule in a Notice of Proposed Rulemaking (“Notice”) to define when someone is/is not an independent contractor. The focus of the proposal is on the “control” element of the independent contractor scenario. It appears the focus will be on various elements of control, e.g., legal, contractual, and seems to emphasize this element in a manner that will often militate a finding of employee status.
The Notice asserts it is adopting a “totality-of-the-circumstances” standard but the actual language in the Notice belies that, as it sets out a new standard to the effect that “scheduling flexibility is not necessarily indicative of independent contractor status where other aspects of control are present.” That places too much emphasis on one factor and does not look at the “totality.” That the Notice gives no weight to this factor (which many independent contractors prize above all else) is a skewing of the test, rendering a finding that the person is an independent contractor very difficult. Although the other factors may indeed show an employer-employee relationship, this crucial factor should not be ignored.
The Notice concentrates so much on an alleged lack of flexibility for the worker that is seems almost obsessive, almost like this is the “only” factor to be considered. In this regard, the Notice mentions various scenarios that would ostensibly limit a worker’s flexibility and freedom but gives no context for the existence of these “conditions.” For example, the Notice states that if the hours are “limited” by the putative employer, that negates flexibility. However, the Notice does not acknowledge that there may well be a number of legitimate business reasons for such limitation, nor does it call for examination of the specific circumstances in such a situation.
The Notice also does not flesh out when a putative employer exercises inordinate control regarding the amount of work the contractor has or can secure. There is no attempt to define the circumstances when a particular arrangement does not allow the contractor to find other clients. It ignores the reality that when a contractor undertakes a project, there may/will be time frames and deadlines built into that project that confine the contractor to those parameters. That has nothing to do with the contractor seeking/securing other work.
The Takeaway
The Notice seems to ignore the desires or operational realities of the worker and focuses on the putative employer and its “extensive” control over that worker. The focus should be on whether the worker is striving to foster his own business and the efforts made in that regard. There is very little meat on the bone in the Notice on this turning point issue, which will only create confusion for the business community, making (years of) judicial interpretation the end result. It is almost as if the Notice is turning the concept of flexibility on its head and making it a chain around the neck of the worker.
And the putative employer…
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