Labor Dept. Offers Views on Worker Classification

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By Ben Penn

The Labor Department July 13 rolled out a new interpretation on the controversial, ambiguous question of whether certain workers are are employees or independent contractors.

The DOL’s Wage and Hour Division issued enforcement instructions to investigators on how to draw the line between employee and independent contractor in the home-care registry industry. The registries compete with traditional home-care providers by referring the elderly and people with disabilities or injuries to nurses and aides. The workers are treated as independent contractors who don’t get minimum wage or overtime protections.

The field bulletin is tailored to a specific occupation within a narrow sector of the workers. But it offers a glimpse into how the Trump administration may task federal investigators to handle an issue that’s perplexing businesses throughout the economy—including app-based companies like Uber and TaskRabbit—that want to maintain an independent contractor model without running afoul of the law.

The guidelines come in response to calls for clarity for home care industry from heavyweight management firm Littler Mendelson and from Sen. Marco Rubio (R-Fla.). Both Littler and Rubio, an ally of Labor Secretary Alexander Acosta, have accused WHD investigators in Florida of applying an overly broad interpretation of the employment relationship, alleging registries have misclassified workers and owe them back pay. They argue that this view of independent contractor misclassification was abandoned by the agency when Acosta withdrew a memo issued in the previous administration that said the overwhelming majority of workers should be treated as employees.

The new field bulletin details the industry-specific factors that investigators must consider when reviewing whether a caregiver has been improperly labeled an independent contractors and is therefore owed back pay for overtime and minimum wage violations. DOL says a registry can provide general training to the worker without being tagged as an employer. But if the registry dictates how to care for the client, that’s a sign of a traditional employment relationship, the WHD states.

“WHD will consider the totality of the circumstances to evaluate whether an employment relationship exists between a registry and a caregiver,” the agency writes in the bulletin. “Because the analysis does not depend on any single factor, and because caregiver registries operate in a variety of ways, WHD will evaluate all factors...”

A Labor Department spokesman told Bloomberg Law the new bulletin isn’t meant to apply to other industries.

“It is tailored to nurse registry operators in the home care industry,” the spokesman said via email.

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