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Federal Register / Vol. 86, No. 86 / Thursday, May 6, 2021 / Rules and Regulations
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The Departments primary subregulatory guidance addressing this topic, WHD Fact Sheet 13, Employment Relationship Under the Fair Labor Standards Act FLSA, similarly states that, when determining whether an employment relationship exists under the FLSA, the test is the economic reality rather than an application of technical concepts, and that status is not determined by common law standards relating to master and servant. 37 Instead, it is the total activity or situation which controls, and an employee, as distinguished from a person who is engaged in a business of his or her own, is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business which he or she serves. The fact sheet identifies seven economic realities factors; in addition to factors that are similar to the six factors used by the federal courts of appeals and discussed above, it also identifies the workers degree of independent business organization and operation.
The fact sheet identifies certain other factors that are immaterial to determining whether a worker is an employee covered under the FLSA or independent contractor, including the place where work is performed, the absence of a formal employment agreement, and whether an alleged independent contractor is licensed by a State or local government.38
In 1969 and 1972, WHD promulgated regulations relevant to specific industries after Congress amended the FLSA to change the way it applied to 1032489, at 1 June 5, 1995; WHD Opinion Letter, 1995 WL 1032469, at 1 Mar. 2, 1995; WHD
Opinion Letter, 1986 WL 740454, at 1 June 23, 1986; WHD Opinion Letter, 1986 WL 1171083, at 1 Jan. 14, 1986; WHD Opinion Letter WH476, 1978 WL 51437, at 2 Oct. 19, 1978; WHD
Opinion Letter WH361, 1975 WL 40984, at 1
Oct. 1, 1975; WHD Opinion Letter Sept. 12, 1969;
WHD Opinion Letter Oct. 12, 1965.
37 WHD Fact Sheet 13 July 2008 is available at https www.dol.gov/sites/dolgov/files/WHD/legacy/
files/whdfs13.pdf last visited April 28, 2021.
38 WHD maintains additional sub-regulatory guidance addressing whether a worker is an employee or independent contractor under the FLSA. For example, WHDs Field Operations Handbook, in its section titled Test of the employment relationship, cross-references Fact Sheet 13. See section 10b05 of Chapter 10 FLSA
Coverage: Employment Relationship, Statutory Exclusions, Geographical Limits of WHDs Field Operations Handbook, available at https
www.dol.gov/sites/dolgov/files/WHD/legacy/files/
FOH_Ch10.pdf last visited April 28, 2021; see also https www.dol.gov/sites/dolgov/files/WHD/legacy/
files/misclassification-facts.pdf last visited April 28, 2021. And the section of WHDs elaws Advisor compliance-assistance materials addressing independent contractors provides guidance very similar to that of Fact Sheet 13. See https
webapps.dol.gov/elaws/whd/flsa/scope/ee14.asp last visited April 28, 2021.

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those industries.39 Those regulations applied a multifactor analysis under the FLSA for determining whether a worker is an employee or independent contractor in those specific contexts.40
Further, WHD promulgated a regulation in 1997 applying a multifactor economic realities analysis for distinguishing between employees and independent contractors under the Migrant and Seasonal Agricultural Worker Protection Act MSPA.41
On July 15, 2015, WHD issued Administrators Interpretation No.
20151, The Application of the Fair Labor Standards Acts Suffer or Permit Standard in the Identification of Employees Who Are Misclassified as Independent Contractors AI 2015
1.42 AI 20151 reiterated that the economic realities of the relationship are determinative and that the ultimate inquiry is whether the worker is economically dependent on the employer or truly in business for him or herself. It identified six economic realities factors that followed the six factors used by most federal courts of appeals: 1 The extent to which the work performed is an integral part of the employers business; 2 the workers opportunity for profit or loss depending on his or her managerial skill; 3 the extent of the relative investments of the employer and the worker; 4 whether the work performed requires special skills and initiative; 5 the permanency of the relationship; and 6 the degree of control exercised or retained by the employer. AI 20151 further emphasized that the factors should not be applied in a mechanical fashion and that no one factor was determinative. AI
20151 was withdrawn on June 7, 2017.43
In 2019, WHD issued an opinion letter, FLSA20196, regarding whether 39 See 37 FR 12084 explaining that Part 780 was revised in order to adapt to the changes made by the Fair Labor Standards Amendments of 1966 80
Stat. 830 and implementing 29 CFR 780.330b to apply a six-factor economic realities test to determine whether a sharecropper or tenant is an employee under the Act or an independent contractor; 34 FR 15794 explaining that Part 788
was revised in order to adapt to the changes made by the 1966 Amendments and implementing 29
CFR 788.16a to apply a six-factor economic realities test to determine whether workers in certain forestry and logging operations are employees under the Act or independent contractors.
40 See id.
41 See 62 FR 11734 amending 29 CFR
500.20h4.
42 AI 20151 is available at 2015 WL 4449086.
43 See News Release 170807NAT, US
Secretary of Labor Withdraws Joint Employment, Independent Contractor Informal Guidance Jun. 7, 2017, available at https www.dol.gov/newsroom/
releases/opa/opa20170607 last visited April 28, 2021.

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workers who worked for companies operating self-described virtual marketplaces were employees covered under the FLSA or independent contractors.44 Like WHDs prior guidance, the letter stated that the determination depended on the economic realities of the relationship and that the ultimate inquiry was whether the workers depend on someone elses business or are in business for themselves.45 The letter identified six economic realities factors that differed slightly from the factors typically articulated by WHD
previously: 1 The nature and degree of the employers control; 2 the permanency of the workers relationship with the employer; 3 the amount of the workers investment in facilities, equipment, or helpers; 4 the amount of skill, initiative, judgment, and foresight required for the workers services; 5
the workers opportunities for profit or loss; and 6 the extent of the integration of the workers services into the employers business.46 Opinion Letter FLSA20196 was withdrawn for further review on February 19, 2021.47
C. The January 2021 Independent Contractor Rule On January 7, 2021, the Department published a final rule titled Independent Contractor Status Under the Fair Labor Standards Act with an effective date of March 8, 2021
Independent Contractor Rule or Rule.48 The Independent Contractor Rule would have introduced into Title 29 of the Code of Federal Regulations a new part Part 795 titled Employee or Independent Contractor Classification under the Fair Labor Standards Act that would have provided a new generally applicable interpretation of employee or independent contractor status under the FLSA.49 The Rule would also have revised WHDs prior interpretations of independent contractor status in 29 CFR 780.330b and 29 CFR 788.16a, both of which apply in limited contexts.50
44 See WHD Opinion Letter FLSA20196, 2019
WL 1977301 Apr. 29, 2019 withdrawn February 19, 2021.
45 See id. at 3.
46 See id. at 4.
47 See note at https www.dol.gov/agencies/whd/
opinion-letters/search?FLSA last visited April 28, 2021.
48 See 86 FR 1168. WHD had published a notice of proposed rulemaking requesting comments on a proposal. See 85 FR 60600 Sept. 25, 2020. The final rule adopted the interpretive guidance set forth in that proposal largely as proposed. 86 FR
1168.
49 See 86 FR 1168.
50 See id.

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