Wyatt Employment Law Report


DOL Issues Proposed Rule Clarifying Distinction Between Employees and Independent Contractors Under the FLSA

Written by:  Sean Williamson

On September 22, 2020, the Department of Labor (“DOL”) issued a proposed rule that attempts to clarify the distinction between employees covered by the Fair Labor Standards Act (“FLSA”) and independent contractors.  The FLSA requires covered employers to pay nonexempt employees at least the federal minimum wage for every hour worked and overtime pay for every hour worked over forty (40) in a work week, and it also mandates that employers keep certain records regarding their employees.  A worker who performs services for an individual or entity as an independent contractor, however, does not fall within the FLSA’s requirements applicable to employees.

The FLSA does not define “independent contractor,” but the DOL and the courts have long interpreted the distinction between an employee and independent contractor to require evaluation of the worker’s economic dependence on the putative employer.  The ultimate inquiry is whether—as a matter of economic reality—the worker is dependent on a particular individual, business, or organization for work (and thus is an employee) or is in business for himself or herself (and thus is an independent contractor).  While this “economic reality” test has existed for some time, the DOL’s proposed rule emphasizes that the underpinnings and application of the test have lacked focus, creating uncertainty in the regulated community.

The DOL’s proposed rule attempts a “clear articulation” of the test by sharpening the inquiry into five distinct factors.  Two “core” factors—(1) the nature and degree of the worker’s control over the work and (2) the worker’s opportunity for profit or loss—would be afforded greater weight than any others in the analysis of economic dependence or lack thereof.  The three remaining, but less probative, factors to be considered under the proposed rule are (3) the amount of skill required for the work, (4) the degree of permanence of the working relationship, and (5) whether the work is part of an integrated unit of production.  If the first and second “core” factors both weigh in favor of finding either an employee or independent contractor relationship, the analysis is likely complete and will not be affected by the remaining three subsidiary factors, which serve as tie-breakers.

 This dual factor analysis, with tie-breaking factors, substantially departs from the multi-factor, “totality of the circumstances” tests applied in various federal courts.  It also shifts the focus of the analysis away from the potential employer’s control over the worker, instead focusing on the worker’s control over his or her work, such as decisions of when to work and for how long.  The DOL’s proposed rule would provide businesses with much needed clarity in classifying their workers, and a more favorable standard for those businesses wishing to treat workers as independent contractors.

Businesses, however, should be cautious in relying on the DOL’s proposal should it ultimately be adopted as a final rule.  The country is in the midst of a hotly contested election cycle.  There is no guarantee that a new presidential administration or Congress would not eliminate the regulation.  Even if the proposed rule survives the pitfalls of electoral politics, it will very likely be challenged in the courts which might decide that the DOL’s interpretation of the FLSA is not entitled to judicial deference.  Finally, the DOL’s proposed rule does nothing to obviate the obligations of businesses to comply with more restrictive state laws.


DOL Issues Guidance on Tracking Remote Work Hours and Childcare Leave Eligibility on Child’s Remote Learning Days

by Daniel Reed

The Department of Labor (“DOL”) recently provided clarity on issues related to remote work and remote learning.

Reasonable Diligence in Tracking Remote Work Employee Hours

The DOL issued guidance on employers’ obligation to track the work hours of employees who are working remotely due to COVID-19 or due to an already existing telework or remote work agreement.

Continue reading


Two New Orders Issued by the Supreme Court of Kentucky

Written by:  Marianna Michael

On July 27, 2020, the Supreme Court of Kentucky entered two new orders to provide continuing guidance on the functions of courts during COVID-19.

The first order, Administrative Order 2020-55, replaces Administrative Orders 2020-42 and 2020-47 in their entirety.  The Order makes the following provisions: Continue reading


DOL Offers Guidance on Retail Exemptions

Written by:  Marianna Michael

In three recent letters, the Department of Labor (“DOL”) offered guidance on the outside sales exemption and the retail or service establishment exemption.

An employer qualifies for the outside sales exemption if its employee’s: (i) primary duty is to make sales (as defined in the Fair Labor Standards Act “FLSA”) or obtain orders or contracts for services or making the use of facilities for which a consideration will be paid by the client or customer and (ii) are customarily and regularly engaged away from the employer’s place or places of business.

The retail or service establishment exemption applies if: (i) the employee is employed by a retail or service establishment; (ii) the employee’s regular rate of pay exceeds one and one-half times the minimum hourly rate; and (iii) more than half of the employee’s compensation for a representative period (not less than one month) consists of commissions on goods or services. Continue reading


United States Department of Labor Publishes Revised FMLA Certification Forms

Written by:  Mitzi D. Wyrick

The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) published streamlined forms for employers and employees to use in requesting leave under the Family and Medical Leave Act (FMLA).  The DOL has attempted to make the new forms easier for employers and employees to understand and use.  For example, more options are available that call for simply checking a box and the forms have been modified to permit electronic signatures.  Continue reading


DOL Releases New Online Tool for Employees to Determine Paid Sick Leave Eligibility

by Courtney R. Samford

On June 23, 2020, the Department of Labor (“DOL”) released an interactive online tool that guides employees through a series of questions to determine their eligibility for paid sick leave or expanded family and medical leave under the Families First Coronavirus Response Act (“FFCRA”).  The online tool is available here.  According to the DOL website, a similar tool for employers will be available soon.


No Mandatory Antibody Testing

by Courtney Ross Samford

The U.S. Equal Employment Opportunity Commission (EEOC) has announced that COVID-19 antibody tests cannot be required before employees are permitted to return to the workplace.  Since an antibody test constitutes a medical examination under the Americans with Disabilities Act (ADA), it is only permitted when it is “job related and consistent with a business necessity.”   Relying on the Centers for Disease Control and Prevention’s (CDC) guidance that antibody tests “should not be used to make decisions about returning persons to the workplace[,]” the EEOC concluded that the testing is neither.  As a result, mandatory antibody testing is prohibited by the ADA.