U.S. Department of Labor Proposes rule tightening criteria for employment status

 If one is an employee, rather than an independent contractor, the Fair Labor Standards Act promises time and a half for overtime.  Thus the status of an Uber driver or other `gig economy' worker matters a great deal.  The United States Department of Labor has issued a notice of proposed rule-making that will make it more difficult to establish that one is a covered employee.

The DOL move comes at a time when courts of the United States are increasingly inhospitable to workers claims.  Although the Third Circuit last year in the Uber case found its drivers to be employees, two months ago a Seventh Circuit panel, in Wallace v. Grubhub, an August opinion by soon to be Associate Justice Amy Barrett barred drivers from suing in court.  The proclaimed textualist found that commerce said that in the Federal Arbitration Act "the phrase “engaged in commerce” as used in § 1 meant something narrower than “affecting commerce” or “involving commerce” as used in § 2."

In the first just about any economic activity involves interstate commerce and is thus within Congress's enumerated powers, but in the second section "involving commerce" means actually transporting goods across state lines, not taking orders via the world wide web and delivering them locally.  Consequence: no right to go to court, no right to a decision by a judge and appeal to a higher court.  Go direct to arbitration. - 

In this rulemaking, the Department [of Labor] proposes to:

• Adopt an “economic reality” test to determine a worker’s status as an FLSA employee or an independent contractor. The test considers whether a worker is in business for themselves (independent contractor) or is economically dependent on a putative employer for work (employee);
• Identify and explain two “core factors,” specifically: the nature and degree of the worker’s control over the work; and the worker’s opportunity for profit or loss based on initiative and/or investment. These factors help determine if a worker is economically dependent on someone else’s business or is in business for themselves;
• Identify three other factors that may serve as additional guideposts in the analysis including: the amount of skill required for the work; the degree of permanence of the working relationship between the worker and the potential employer; and whether the work is part of an integrated unit of production; and
• Advise that the actual practice is more relevant than what may be contractually or theoretically possible in determining whether a worker is an employee or an independent contractor.

The Department seeks comment on all aspects of the proposed rule; comments can be submitted through regulations.gov for 30 days following the publication on the Notice of Proposed Rulemaking in the Federal Register.