ISO: Uniform, Transparent Regulatory Standard to Distinguish Independent Contractors from “Employees”

Washington Legal Foundation’s Legal Backgrounder

Nathaniel M. Glasser and Stuart M. Gerson, Members of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s Washington, DC, and New York offices, authored an article in the Washington Legal Foundation’s Legal Backgrounder, titled “ISO: Uniform, Transparent Regulatory Standard to Distinguish Independent Contractors from ‘Employees.’”

Following is an excerpt:

Since enactment of the Fair Labor Standards Act (FLSA), courts and regulatory agencies have struggled, and failed, to develop a consistently-applied test for distinguishing between employees and independent contractors. Vacillating between a common-law control test and an economic-realities test, courts and agencies have even combined the two tests into a hybrid test at times without providing much-needed bright-line rules. In today’s “gig” economy, workers and employers alike require predictability in forging their employment relationships. Current approaches have led to contradictory and often divisive outcomes, leaving employers and workers in need of a clear and consistent approach.

Uniform reliance on the common-law control test for worker categorization should be policymakers’ goal. This Legal Backgrounder discusses three possible options for achieving that goal: (1) US Department of Labor (DOL) issuance of new sub-regulatory guidance returning to the common-law test; (2) uniform adoption by the courts of the common-law test; and (3) passage by Congress of new or clarifying legislation mandating application of the common-law test.