US Department of Labor endorses Independent Contractor status

The United States Department of Labor has seemingly done an about-face on the issue of independent contractors. This could impact small businesses greatly as it is generally perceived that the use of independent contractors is less costly than employees.

During the Obama Administration, the DOL issued an opinion which suggested that some independent contractors (so called “gig” workers) should be classified as employees. Shortly after the current administration came into office, the DOL rescinded its opinion.

This week, the DOL furthered its position. In an advisory opinion (which technically applies ONLY to the unnamed virtual marketplace company that requested it), the DOL opined that company was right to treat its workers as independent contractors. The impact of this is that the company does not have to pay its workers the federal minimum wage or overtime, or pay a share of Social Security taxes.

The DOL looked to the following factors when making its decision:

• The nature and degree of the potential employer's control;

• The permanency of the worker's relationship with the potential employer;

• The amount of the worker's investment in facilities, equipment, or helpers;

• The amount of skill, initiative, judgment, or foresight required for the worker's services;

• The worker's opportunities for profit or loss; and

• The extent of integration of the worker's services into the potential employer's business.

This could be a boon for small and mid sized businesses everywhere as they strategize over their personnel needs for the near future. To read the opinion, click here.