Last week the US Department of Labor’s Wage and Hour Division issued clear and timely guidance on the question of which workers should be considered employees and therefore covered under the Fair Labor Standards Act. You can read the guidance the Administrator’s Interpretation at: http://www.dol.gov/whd/workers/Misclassification/AI-2015_1.pdf.

Here are some highlights:

• In instances where employees are labeled something other than contractors—“owners,” “partners,” or “members of a limited liability company”—the determination of whether the workers are in fact FLSA covered employees should be made by applying an economic realities analysis.
• The multi-faceted economic realities test focuses on whether the worker is economically dependent on the employer or truly in business for him or herself.
• Job designation given by a company is not determinative of a worker’s employment status.
• This Administrator’s Interpretation is not new. It explains long-standing and developed case law and DOL interpretations of 77-year-old “suffer or permit to work” terms. It should not come as a surprise to companies.