Employee/Independent Contractor Status

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The legal landscape for defining “employers,” “employees,” and “independent contractors” can be quite dynamic, as this past year has illustrated. In January 2021, the Department of Labor issued an employer-friendly independent contractor rule that would have departed from the agency’s typical balancing test, but it formally withdrew this rule in early May with the change in administration. The DOL’s independent contractor rule is intended to provide guidance to employers when determining whether a worker is an employee or an independent contractor. For employers, this is an important distinction because the FLSA’s overtime and minimum wage protections apply only to employees, not independent contractors. Because courts and employers sometimes struggle to find this line using the economic realities test and its iterations, the Trump-era independent contractor rule aimed to provide a clearer definition of “employee,” as opposed to “contractor.” The DOL has not yet proposed a new independent contractor test, but employers should be mindful that the Biden administration may potentially announce a new rule on this topic.
Continue Reading Recent Shifts In The Independent Contractor v. Employee Classification Rules

In an April 28, 2021 decision, the Ninth Circuit determined that that the application of California’s ABC test (also known as AB-5) to motor carriers is not preempted by the Federal Aviation Administration Authorization Act of 1994. The ABC test is a judicially-created independent contractor test that was ultimately codified via AB-5…
Continue Reading Ninth Circuit Rules California’s ABC Test is Not Preempted by the Federal Aviation Administration Authorization Act

Previously, we wrote about a final rule issued by the Department of Labor (DOL) during the last days of the Trump administration addressing the appropriate test for classifying independent contractors under the FLSA. We noted that the future of the rule was in question because it was not set to go into effect until March 8, 2021. This delayed implementation provided an opportunity for the incoming Biden administration to freeze or withdraw the rule.
Continue Reading DOL Freezes Rule on Independent Contractor Classification Test under the FLSA and Withdraws Several Opinion Letters

In the last weeks of the Trump Administration, the Department of Labor published its final rule for determining whether an individual is an employee or independent contractor under the Fair Labor Standards Act. The distinction between an employee and independent contractor is of critical importance because independent contractors are not entitled to the benefits of the FLSA, namely minimum wage and overtime.
Continue Reading DOL Issues Final Rule on Independent Contractor Classification Test under the FLSA

The U.S. Department of Labor recently released a proposed rule seeking to clarify independent contractor vs. employee status under the Fair Labor Standards Act.   The proposed rule seeks to simplify the “economic realities” test currently applied by federal courts in various forms.
Continue Reading Deadline Approaching to Submit Comments on DOL Proposed Independent Contractor Rule

On September 10, 2020, the United States District Court for the District of Massachusetts issued a Memorandum and Order granting summary judgment in favor of a franchisor in response to claims by a purported class of franchisees that they were not truly independent contractors, but employees of the franchisor. The main issue addressed in the case was whether specific federal legal requirements that are imposed upon franchisors trump the general Massachusetts independent contractor classification statute.
Continue Reading Massachusetts District Court Rejects Employee Classification for Franchisees

The First Appellate District’s recent decision in Subcontracting Concepts, LLC v. DeMelo, A152205 (April 10, 2019) applies well-established unconscionability principles to an arbitration agreement signed by an employee of an independent contractor. The doctrine of unconscionability refers to an absence of meaningful choice with respect to the terms of a contract, usually the result of unequal bargaining power between the parties.
Continue Reading California First Appellate District Reminds Employers: Check Arbitration Provisions for Unconscionability

On May 2, 2019, the Ninth Circuit ruled in Vazquez v. Jan-Pro Franchising International, holding that the new independent contractor test established by the California Supreme Court in its 2018 decision in Dynamex v. Superior Court applies retroactively to franchisors. As a result of this decision, employers and franchisors who have classified workers as independent contractors may see an increase in wage and hour class actions alleging that the workers are or have been misclassified. Additionally, the decision has serious implications for any California companies that operate under a franchise business mode…
Continue Reading Ninth Circuit Determines that Dynamex Independent Contractor Test Applies Retroactively to Franchisors