The Coalition to Promote Independent Entrepreneurs recently urged the Department of Labor (DOL) to "provide additional clarity and predictability" in its proposed independent contractor rules.
While the Insights Association was busy urging DOL "to recognize in regulation that individuals receiving incentives for participation in marketing research are independent contractors, not employees," in its proposed rules, the coalition, of which IA is a member, had broader concerns.
According to the coalition, “the determination of whether an individual is an ‘employee’ for purposes of the Fair Labor Standards Act of 1938 (“FLSA”) has been the subject of great uncertainty and unpredictability ever since the term was defined by an ‘economic realities’ test.”
IA and the coalition have advocated for the application of the generally predominant “common-law test for purposes of the FLSA” so as to “harmonize the definition of the term for purposes of federal statutes and thereby mitigate the risk of inconsistent worker-status determinations for purposes of different federal laws,” such as in the Modern Worker Empowerment Act (H.R. 4069). However, “the Coalition agrees with DOL’s judgment that, at this juncture, it would take an act of Congress to replace the ‘economic realities’ test for purposes of the FLSA with the common-law test.”
Citing a 1987 court decision by Judge Easterbrook, the coalition noted his frustration that courts still had not legal rule governing the economic realities test’s application even “50 years after the Act’s passage.” Easterbrook noted that the “balancing approach” called for under the economic realities test “is unsatisfactory both because it offers little guidance for future cases and because any balancing test begs questions about which aspects of ‘economic reality’ matter, and why.”
According to the coalition, little has changed since that decision.
The coalition’s comments agreed with DOL that the ultimate inquiry should be an individual’s economic dependence on an entity for workand supported DOL’s clarification of the “integrated unit” factor and the combination of the factors “opportunity for profit or loss” and “investment,” the attachment of additional weight to two core factors, and not treating them as separate factors, However, the coalition recommended that “exclusivity” be considered as part of the “permanence of the working relationship” factor, and that “initiative” should be considered as part of the “skills required” factor.