On October 13, 2022, the U.S. Department of Labor (“DOL”) published its proposed rule regarding the classification of employees and independent contractors under the Fair Labor Standards Act (“FLSA”) in an attempt to resolve inconsistent analyses amongst the Federal Courts of Appeals. The proposed rule would return to a totality-of-the-circumstances analysis of the “Economic Reality Test” (with a few modifications), which would have the effect of making it more difficult to classify workers as independent contractors.
In a recent opinion in Hill v. Walmart Inc., the Ninth Circuit affirmed summary judgment in favor of Walmart on Hill’s claim for waiting time penalties under Labor Code section 203, finding there was a good-faith dispute about whether Hill was properly classified as an independent contractor of Walmart. …
Continue Reading Good Faith Dispute Over Employment Relationship Allows Walmart to Escape Waiting Time Penalties
On Monday, the Ninth Circuit vacated a judgment for Grubhub, Inc. and against a former food delivery driver, Raef Lawson, who claimed that he was misclassified as an independent contractor when he performed food delivery services. Lawson had asserted claims for minimum wage, overtime, and expense reimbursement.
Continue Reading Ninth Circuit Reversed Grubhub’s Victory on Independent Contractor Classification in Light of the Retroactive Application of Dynamex
On May 5, 2021, the U.S. Department of Labor (“DOL”) announced it is officially withdrawing, effective May 6, 2021, the rule promulgated under the Trump administration addressing the standard to determine whether an individual is properly classified as an employee or an independent contractor under the Fair Labor Standards Act (“FLSA”). The rule, which was rolled out two weeks before the end of President Trump’s term, was initially scheduled to take effect on March 8, 2021 but was delayed by President Biden until May 7, 2021. …
Continue Reading U.S. Department of Labor Announces Withdrawal of Trump-Era Independent Contractor Rule
In a decision of considerable significance in the world of wage and hour litigation, the United States Court of Appeals for the Fifth Circuit significantly departed from conventional standards for assessing conditional certification under Section 216(b) of the Fair Labor Standards Act (“FLSA”). In Swales v. KLLM Transport Services, Inc., the Fifth Circuit rejected the conditional certification process entirely and drastically altered the procedure for assessing whether potential members of a collective action under the FLSA are “similarly situated.”…
Continue Reading Fifth Circuit Shuts Down FLSA Conditional Certification
On January 7, 2021, the U.S. Department of Labor (“DOL”) announced its final rule (the “Final Rule”) setting the standard to determine whether an individual is an employee or an independent contractor under the Fair Labor Standards Act (“FLSA”). The employee versus independent contractor debate has garnered significant attention over the years as more workers desire the flexibility that comes with contractor status. While the Final Rule – the DOL’s first codification of the independent contractor test – offers businesses, workers, regulators, and courts predictable guidance, it is unlikely to remain in its current form since it does not take effect until over one month after President-elect Biden takes office. Nonetheless, employers and businesses should understand the import of the Final Rule and continue to monitor federal and state law developments on this important topic.
Continue Reading U.S. Department of Labor Finalizes New Rule Setting Forth Test to Assess Employment Versus Contractor Status; But Will It Survive Under the Biden Administration?
In yet another decision concerning gig economy businesses, the New York Supreme Court, Appellate Division, Third Judicial Department upheld a decision of the Unemployment Insurance Appeal Board (the “Board”), which held that Uber exercised sufficient control over its drivers to qualify as their employer. Accordingly, it found Uber to be liable for unemployment insurance contributions with respect to the drivers at issue.
Continue Reading Battle Over Rideshare Worker Classification Continues: New York Supreme Court Holds Uber Drivers Are Employees, Entitled to Unemployment Insurance
On September 22, 2020, the United States Department of Labor (DOL) released a long-awaited proposed rule (the “Proposed Rule”) providing guidance for determining employee versus independent contractor status under the Fair Labor Standards Act (FLSA). For decades, employers have struggled with properly classifying workers, oftentimes resulting in substantial liability for, among other things, unpaid overtime and unpaid payroll taxes. If adopted, the Proposed Rule may make it easier for employers to classify workers as independent contractors.
Continue Reading Independent Contractor v. Employee: DOL Releases Proposed Rule Clarifying Test for Classification of Workers
As we have previously reported, California law utilizes the “ABC” test to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. …
Continue Reading Expanding Independent Contractors in California: New Law Awaits Governor’s Signature
At the beginning of this year, New Jersey Governor Phil Murphy signed a package of legislation aimed at protecting the rights of workers who have been misclassified as independent contractors. One of these new laws, Assembly Bill 5843, requires employers to post notices regarding employee misclassification. The New Jersey Department of Labor and Workforce Development has now published the required posting in two different sizes (11 x 17 and 8.5 x 11). …
Continue Reading New Jersey Department of Labor Releases Posters for Employers to Utilize to Satisfy Employee Misclassification Posting Requirements
As reported here and here, California recently enacted new legislation – Assembly Bill 5 – that expanded the scope of an “employee” under state law. Beginning January 1, 2020, the answer to whether a person providing services in California is an independent contractor (as opposed to an employee) under the California Labor Code, the Industrial Welfare Commission (“IWC”) Wage Orders, and the California Unemployment Insurance Code, will generally depend on whether they satisfy all three prongs of the so-called ABC Test:
- The worker must be free from the control and direction of the hirer in connection with the performance of the work.
- The worker must perform work outside the “usual course” of the hirer’s business.
- The worker must be customarily engaged in an independent established trade, occupation, or business of the same nature as the work performed.
There are a myriad of occupational and industry exemptions to the application of the ABC Test, many of which are highlighted here.
Having tightened independent contractor classification standards, the next big target for the state legislature may be joint employer liability.…