The U.S. Department of Labor has issued a statement containing new guidance on classifying workers as employees or independent contractors under the federal Fair Labor Standards Act (FSLA), in response to the controversy surrounding Uber and other “sharing economy” firms. The statement delineates six elements that together form an “economic realities” test to determine whether an employee is “truly an independent business or is economically dependent on the employer.” The six elements, phrased a essential questions, are:
- Is the work an integral part of the employer’s business?
- Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?
- How does the worker’s relative investment compare to the employer’s investment
- Does the work performed require special skill and initiative?
- Is the relationship between the worker and the employer permanent or indefinite?
- What is the nature and degree of the employer’s control?