DOL Announces Proposed Rule on Independent Contractor Status under the FLSA

On September 22, 2020, the US Department of Labor proposed a new rule to clarify whether a worker will be classified as an independent contractor or an employee under the Fair Labor Standards Act (“FLSA”). The proposed rule will be available for review and public comments for 30 days after it is published in the Federal Register.

The proposed rule adopts an “economic reality” test to determine a worker’s status. That test focuses on whether a worker is economically dependent upon an employer for work or is truly in business for themselves . Economic dependence is the ultimate inquiry. In applying this test, the two most important factors are:

  • Who exercises substantial control over key aspects of work performance? Where the worker sets their own schedule, selects projects, and retains the ability to work for an employer’s competitors, this factor will weigh in favor of independent contractor status. In contrast, where the employer sets the schedule, controls the workload, and requires the worker to perform work exclusively for that employer, this factor will weigh in favor of employee status.
  • Does the worker have an opportunity for profit or loss (i.e. an ability to affect their earnings by the exercise of their own management and initiative)? If the worker can earn more or lose profits based upon their own managerial skills or business acumen, for example by hiring helpers or choosing particular equipment or materials, this factor will weigh in favor of independent contract status. If the worker is unable to affect their earnings or is only able to do so by working more hours or working more efficiently, this factor will weigh in favor of employee status.

Other factors to be considered in assessing independent contractor vs. employee status under the FLSA include the amount of skill required for the work, the permanence of the working relationship between the parties, and whether the work performed by the individual is a component of the employer’s integrated production process for a good or service.

The DOL’s proposed rule emphasizes that the parties’ actual practice is key to the assessment of independent contractor status. What the parties state in a contract or what may be theoretically possible under a work arrangement is of little relevance if it differs from the reality of their working relationship.

Employers should keep in mind that many states have adopted their own tests for independent contractor status under their respective state wage and hour laws; these tests can differ from state-to-state. The tests may also vary based upon the state law issue being addressed, i.e. unemployment compensation eligibility, workers’ compensation coverage, employment tax liability, etc.

The issue of independent contractor versus employee status continues to challenge employers across all sectors throughout the U.S. We will continue to closely monitor the DOL’s proposed rule and other state-based developments in this area. In the meantime, it might be a good time to review your independent contractor agreements and work relationships within your organization. Your partners at Lake Effect HR & Law can help you ensure compliance while retaining the flexible and dynamic workforce that your organization needs. Contact us at info@le-hrlaw.com or 1-844-333-5253.

DOL Issues Revised FFCRA Regulations

On September 11, 2020, the U.S. Department of Labor’s Wage and Hour Division posted revised regulations to clarify certain rights and responsibilities under the paid leave provisions of the Families First Coronavirus Response Act (“FFCRA”). DOL’s actions are in direct response to an August 2020 New York Federal District Court ruling that invalidated parts of prior FFCRA regulations. The revised regulations will become effective September 16, 2020, when they are published in the Federal Register.

Key portions of the revised regulations provide the following:

  • An employee is only entitled to Paid Sick Leave (“PSL”) and Expanded Family and Medical Leave (“EFML”) under FFCRA if the employer would otherwise have work available for that employee to perform. If there is no work available due to circumstances other than a qualifying reason for the leave, i.e. the employer has laid off or furloughed employees, or has temporarily or permanently closed the worksite, then an employee is not entitled to FFCRA leave. This “available work” requirement applies to all qualifying reasons for FFCRA leaves.
  • An employee must obtain employer approval to take intermittent FFCRA leave for any qualifying reason, regardless of whether the employee is teleworking or working on-site. Intermittent leave occurs when the employee takes leave in separate blocks of time due to a single qualifying reason. For an employee working on-site, many of the qualifying reasons for EPSL leave will not lend themselves to intermittent leave because they create a high risk of spreading the virus. Of note, the revised regulations clarify that the employer-approval requirement does not apply to employees who take FFCRA leave in full-day increments to care for children whose schools are operating on an alternate day (or other hybrid attendance) basis because such leave is not intermittent. In that scenario, where a school is physically closed to the employee’s child on particular days, each day of the school closure constitutes a separate reason for FFCRA leave. Thus, the employee may take leave due to the school closure until that qualifying reason ends (i.e. the school re-opens) and then take leave again when the new qualifying reason begins (i.e. the school closes again) – without the approval of the employer.
  • The definition of a “health care provider,” who may be exempted from FFCRA’s leave provisions, includes only those who meet the definition of that term under the FMLA regulations and those who are employed to provide diagnostic services, preventive services, treatment services, or other services that are integrated with and necessary to the provision of patient care.
  • Employees must provide required documentation to support FFCRA leaves to their employers as soon as practicable, but they need not provide it prior to taking PSL or EFML. Similarly, an employee must provide advance notice of EFML as soon as practicable. If the need for that leave is foreseeable, the employee should provide notice before taking the leave.

Your partners at Lake Effect HR & Law are closely monitoring the impact of COVID-19 on the workplace. Keep watching for blogs and emails for important legal updates and HR best practices. The attorneys and HR professionals at Lake Effect HR & Law are ready and willing to help. Contact us at info@le-hrlaw.com or 1-844-333-5253.

Agencies Update Guidance on COVID-Related Issues as Employees Return to Work

OSHA and the US Department of Labor provide additional guidance on employee health screening information and FFCRA leaves

As more employers resume onsite operations and welcome employees back to the workplace, OSHA continues to update its Guidance on Returning to Work. New guidance highlights potential document retention obligations for employers that record employee health screenings and/or temperature checks related to COVID-19 symptoms. OSHA specifies that if an employer creates records relating to those screenings, the records might qualify as medical records under the Access to Employee Exposure and Medical Records Standard (29 C.F.R. 1910.1020). Under this standard, the employer is required to retain an “employee medical record” for the duration of the worker’s employment plus 30 years. Notably, however, records of these activities will not constitute a covered “employee medical record” for purposes of OSHA’s record retention requirement unless they are records “concerning the health status of an employee which is made or maintained by a physician, nurse, or other health care personnel, or technician.” Furthermore, employers are not required to make a record of health screening responses and/or temperature checks. Employers can choose to simply receive the information in real time, make a decision, and not even create a record of the results. That may be the best practice for employers, given the current uncertainty in this area.

The Department of Labor’s Wage and Hour Division also issued a new Field Assistance Bulletin that addresses the rights and obligations of employees who request FFCRA leaves to care for children this summer. FFCRA requires employers to provide eligible employees with up to 12 weeks of expanded family and medical leave if the employee is unable to work or telework because they need to care for a child whose “place of care” is closed for reasons relating to COVID-19. The bulletin specifies that for purposes of FFCRA, “place of care” includes summer camps, summer enrichment programs, and summer school. Thus, an employee may request the expanded family and medical leave due to such closures and the resulting need to care for a child. However, that employee must support the request, either orally in writing, by providing the employer with:

  • an explanation of the need for the leave,
  • the name of the child,
  • the name of the specific summer camp or program that the child would have attended had it not closed, and
  • a statement that no other suitable person is available to care for the child.

Notably, the employee must also provide some evidence of a plan for the employee’s child to attend the summer camp or program (i.e. prior attendance, submission of an application or a deposit, or some other evidence of an intent to enroll). Recall under prior IRS guidance, parental care is primarily limited to children under age 14, unless the child is older and has certain condition/s that require enhanced care.

If your organization conducts health screenings as part of COVID-19 prevention efforts, or if you have any questions about employee eligibility for FFCRA leaves, contact your HR and employment law partners at Lake Effect. We can help guide you through this rapidly evolving legal landscape. Please keep watching for blogs and emails from us for important legal updates and HR best practices. Contact us at info@le-hrlaw.com or 1-844-333-5253.

Lake Effect HR & Law, LLC
(844) 333-5253 (LAKE)
info@le-hrlaw.com

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