An issue that routinely arises in the labor field is whether a worker is an “independent contractor” or an “employee.” Misclassification of workers as independent contractors can have serious consequences, so companies must exercise caution when treating someone as an independent contractor. One problem, however, is that the test for employment status varies depending on which law is involved. Thus, it is possible for someone to be an independent contractor under some laws but an employee under others. This article provides a brief overview of the different tests.
Fair Labor Standards Act
The Fair Labor Standards Act (FLSA) defines the word “employee” as “any individual employed by an employer.” 29 U.S.C. §203(e)(1). The FLSA also includes a definition of “employ” as “suffer or permit to work.” Id. §203(g). “This latter definition…stretches the meaning of ‘employee’ to cover some parties who might not qualify as such under a strict application of traditional agency law principles.” Nationwide Mut. Ins. v. Darden, 503 U.S. 318, 326 (1992) (citations omitted). See also Falk v. Brennan, 414 U.S. 190, 195 (1973) (noting the “expansiveness” of the definition).
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