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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:

  1. The worker must be free from the control and direction of the hirer in connection with the performance of the work.
  2. The worker must perform work outside the “usual course” of the hirer’s business.
  3. 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.

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Continue Reading Back to the Joint Employer: Having Changed the Classification Test for Independent Contractors, Will the California Legislature Target the Joint Employer Test Next?

On November 7th a bill was introduced in the New Jersey legislature that would, like California’s AB 5 (see our previous blog here), codify a stricter version of the ABC test for determining independent contractor classification. The bill, S4204 (text available here), also affirms New Jersey courts’ use of the ABC test under the state’s unemployment law, Wage and Hour Law, Wage Payment Law, and other contexts.…
Continue Reading New Jersey Bill Would Codify a Stricter Version of ABC Test for Determining Independent Contractor Status

As previously reported, Governor Gavin Newsom recently signed into law AB 5. The controversial law narrowing the classification of independent contractors was aimed at companies like Uber and Lyft. But what does it mean for the entertainment industry?…
Continue Reading California AB 5 in Entertainment, Media and Advertising

On September 18 2019, Governor Gavin Newsom signed into law AB-5, which codified the California Supreme Court’s Dynamex v. Superior Court decision.  In Dynamex, the California Supreme Court adopted the so-called “ABC” test to determine coverage under the Industrial Welfare Commission (“IWC”) Wage Orders.  AB-5 expands the application of the ABC test to the entire California Labor Code and will take effect on January 1, 2020.…
Continue Reading It’s Official: Newsom Expands The Definition of “Employee” Under California Law