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OK at Work, hosted by Offit Kurman attorneys Russell Berger and Sarah Sawyer, is a weekly podcast that discusses current events and legal issues impacting business owners. From updates on the ever-changing employment law landscape to the risks and benefits of integrating AI into your workplace, subscribe to stay up-to-date on issues and events that may impact you and your business.
Sarah Sawyer: Welcome to this
week's OK at Work with myself,
Sarah Sawyer, my colleague Russell
Berger with Attorneys Offit Kurman.
And today we are talking about
the independent contractor role.
So another thing that's in the news
with the Trump administration with
some updates on how they are going to
be interpreting that classification,
how they're gonna be enforcing it.
So some updates there on
what to be looking out for.
And so just a quick primer, in most
instances, individuals gonna be
considered an employee unless you can
establish that they are an independent
contractor and there's state and
federal tests that establish that
and factors and things to consider.
So just like a lot of the things
we talk about on OK at work, it's
super straightforward and easy.
No.
It can be a little complicated
and very fact specific.
So what is the latest Russell?
Russell Berger: Yeah.
There's a mess of different
tests that are involved.
And to your point about, not just
the federal and state division around
that, there's a test for IRS and taxes.
There's a test for unemployment.
There's a test for workers' comp.
There's a test for, FLSA wage.
And they differ from state to state.
They differ from state to federal.
They differ from, category
of law to category of law.
So for example, in Maryland we have
a version of an A B, C test, which is
a three-part test for unemployment.
If you're that same employee or the
same individual working in Maryland
under and for purposes of wages under
the FLSA, which is the federal law,
you'd be looking at something known
as the economic realities test.
So a lot of different tests.
Can be a lot of confusion.
Best to look at this globally and assess.
Because you can only
pick one classification.
So you have to be right on all of them or
at least take the risk on some of them.
So what the administration has now
done is basically reverted back
to a position that the Department
of Labor had held previously.
During the Biden administration, there was
a rewriting of how the Department of Labor
was going to interpret misclassification
issues under the FLSA and what the Trump
DOL has now done is swung back to what the
guidance was in 2008, what the guidance
was in 2019 and is reverted back to really
a version of the economic realities test.
And again, I say that, and I know we've
said it here many times before, this
is the federal government's position.
Courts still say what the law is.
And you still have to look
at the law in your circuit.
Because this varies from, state to state,
circuit to circuit at the federal level.
But more or less frankly for us
in Maryland, this guidance is
probably more in line with the state
of the case law than the updated
Biden administration guidance.
Sarah Sawyer: Yeah.
And there's several factors and it's
definitely something that, if you're
ever going to go to classify someone
as an independent contractor instead of
an employee, just based on the laundry
lists of laws you have to comply with
and different things as you can probably
tell by that laundry list, there is a big
impact in misclassification and there's
a lot in these tests, you describe,
it's like economic realities, tests,
these factors are very fact specific.
They deal around the nature of the
relationship, the type of control over
the individual, I'm just paraphrasing
here because it would be a lot to get
into all the details of all of these tests
and we'd have to be here for an hour.
It has to do with control.
It has to do with the nature of their
work versus the nature of your business.
How consistent the relationship
is, how much you're dictating
the work versus the product.
So it's definitely very fact specific
and something that warrants an analysis.
And I think it's hard to
go through that analysis.
It takes time and might just
classify someone as a contractor
without wanting to go through that.
But I think a moral of the story is
that this is definitely something to
pay attention to and something you wanna
do a specific analysis of every time.
Russell Berger: Right.
No two positions are necessarily the same.
No two companies are necessarily the same.
Especially given that the same fact
pattern could get different answers
under different laws that both apply.
It's something that really should
be a thoughtful consideration.
And as I know we've said before, you
don't just get to pick whether someone's
an independent contractor or an employee.
It's something that should be
thoughtfully analyzed because the law
is ultimately gonna control, regardless
of which side you come down on.
Sarah Sawyer: Yeah.
Well, something to keep an eye on.
Well, thanks
Russell.
See you next time.