Employee or Independent Contractor? DOL on the Virtual Marketplace

If you love employee classification issues (and who doesn't?), then be sure to check out the U.S. Department of Labor's new opinion letter, FLSA2019-6. The opinion addresses a virtual marketplace company (VMC).

[A VMC] is an online and/or smartphone-based referral service that connects service providers to end-market consumers to provide a wide variety of services, such as transportation, delivery, shopping, moving, cleaning, plumbing, painting, and household services.

Not official use.

This hip new opinion also tosses out trendy phrases like the "on-demand economy" and "sharing economy." And then, of course, it devolves into the convoluted world of trying to discern whether workers are employees or independent contractors under one of the approximately 35,000 (rough estimate) tests.

Under the FLSA, "the touchstone of employee versus independent contractor status has long been 'economic dependence.'” And, of course, the DOL applies . . . wait for it . . . you know its coming . . . a vague, non-exhaustive, multi-factor test, weighing the factors under the totality of the circumstances! Yaaaayy.

(1) The nature and degree of the potential employer’s control; 

(2) The permanency of the worker’s relationship with the potential employer; 

(3) The amount of the worker’s investment in facilities, equipment, or helpers; 

(4) The amount of skill, initiative, judgment, or foresight required for the worker’s services; 

(5) The worker’s opportunities for profit or loss; and 

(6) The extent of integration of the worker’s services into the potential employer’s business.

The DOL includes a lengthy analysis, that you should read for yourself if interested. A major factor here, was that the service providers had the "flexibility to choose if, when, where, how, and for whom they will work."

Disclaimer: Analysis differs depending on the underlying legal issue, jurisdiction, venue, and circumstances. Hence the 35,000 (rough estimate) other tests.