DOL Signals Return to Historical Test to Decide Worker Classification

The Wage and Hour Division of the Department of Labor (DOL) issued a Field Assistance Bulletin (FAB) on July 13 titled “Determining Whether Nurse or Caregiver Registries Are Employers of the Caregiver.” Although this FAB focuses on the caregiver registry industry, it provides the new administration’s first substantive guidance on independent contractor classification.

A year ago, the DOL withdrew its 2015 Administrative Interpretation (AI) on independent contracting but did not replace the AI with other guidance, stating only that removal of the AI “does not change the legal responsibilities of employers under the Fair Labor Standards Act.” The 2015 AI on independent contracting, in a radical shift of direction for the DOL and departure from IRS standards, asserted that lack of control over the worker was not a determining factor for finding independent contractor status. The DOL concluded in the 2015 AI that “most workers are employees under the FLSA’s broad definitions.”

Reverting to historical test

Returning to its historical approach, the DOL in the new FAB states it will consider the “totality of the circumstances to evaluate whether an employment relationship exists” and “will evaluate all factors … to reach appropriate conclusions in each case.” The factors the DOL will consider in the caregiver registry industry indicate a return to the focus on historically important factors, including control of the work performed by the independent contractor.

The recurring theme, which applies across industries, is that registries may avoid a determination that they are the caregivers’ employer if they avoid controlling and/or becoming involved in the client-caregiver relationship. Helpfully, however, the FAB acknowledges that registries can serve as the liaison between the independent contractors and caregivers without defeating the independent contractor relationship:

  • Background and reference checks — Conducting background checks, confirming credentials, and performing other quality-control measures do not indicate employment. Registries can cross the line into employment if they use subjective criteria to evaluate the suitability of independent contractors for referral to clients.
  • Hiring and firing —  Once a registry informs a client of independent contractors who meet the client’s objective requirements, the client alone has authority to hire and fire the independent contractor from that engagement. Registries that are more actively involved in hiring, or that fire an independent contractor for violating the law, industry standards, or the client’s directives, may be considered employers.
  • Scheduling or assigning work — Registries cannot control independent contractors’ schedules or manage the work independent contractors perform. Registries can facilitate initial communications between independent contractors and clients, but, afterwards, the independent contractors and clients must determine the schedule and the scope of work.
  • Controlling the work — Independent contractors and clients must manage their own relationship and the services provided. Registries cannot exercise control by giving training or instructions, evaluating independent contractors’ performance, requiring independent contractors to report to the registry instead of the client in the event of shift cancellations, limiting independent contractors’ work hours or number of clients, or prohibiting independent contractors from working directly with clients outside of the registry.
  • Setting the pay rate — Independent contractors and clients must set the pay rates, but registries can act as a liaison and advise on typical market rates without straying into employer territory. A third-party payor, such as Medicaid or other government programs, dictating the pay rates does not indicate the registry is the employer.
  • Charging fees — Charging fees based upon the number of hours an independent contractor works may indicate an employment relationship, as the registry may have an ongoing interest in how many hours the independent contractor works and the accuracy of the reported work hours. One-time fees and administrative charges do not indicate employment.
  • Providing payroll-related services — Registries can perform “payroll-related functions,” including collecting clients’ payments and disbursing the payments to independent contractors without being considered the employer. Advancing pay to independent contractors from registry funds, as opposed to waiting for the clients’ payments, may indicate employment.
  • Tracking hours worked — “Active creation and verification” of independent contractors’ time records point toward employment. Registries are limited to requiring submission of accurate time records and collecting time records that the client has verified or adjusted for purposes of any payroll processing services the registry provides.
  • Purchasing equipment and supplies — A registry’s operational expenses and investment in office space do not indicate employment so long as the registry does not provide equipment or materials to independent contractors.  Investment in training, professional licensing, or insurance for independent contractors point toward employment.
  • Receiving EINs or 1099s — Independent contractors acquiring Employment Identification Numbers from the IRS, complying with state law by carrying liability insurance, or being issued an IRS 1099 form are not relevant to whether those individuals have been properly classified as independent contractors.

The FAB provides long-awaited and specific guidance on how to structure independent contractor relationships in the caregiver registry industry but also more generally, and it signals the DOL’s return to the traditional, multi-factor balancing test to determine independent contractor status with a primary focus on control of the worker. This guidance is welcome news for employers following the tougher new California independent contractor standards under the Dynamex decision.

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Independent contracting will remain one of the most challenging issues facing the business community because of the stark differences in legal standards between federal and state laws — and even among different laws in the same state (e.g., taxes versus wage-hour versus unemployment). In light of the DOL’s new FAB and the Dynamex decision, businesses should consider reviewing their independent contractor relationships under both federal and state laws.

This was originally published on Littler Mendelson’s website. © 2018 Littler Mendelson. All Rights Reserved. Littler®, Employment & Labor Law Solutions Worldwide® and ASAP® are registered trademarks of Littler Mendelson, P.C.

Tammy D. McCutchen is a principal in the Washington, D.C. office of the law firm Littler Mendelson. A former administrator of the Wage and Hour Division at the U. S. Department of Labor, she is a leading authority on federal and state wage and hour laws who now represents and counsels management clients in connection with all types of labor and employment matters. Contact her at

Angelo Spinola is a shareholder in the Atlanta office of Littler Mendelson. He regularly represents employers across the country in collective, class, and hybrid actions brought under the Fair Labor Standards Act and various state wage and hour laws. Appearing on behalf of employers in federal and state courts and administrative tribunals throughout the United States, Angelo has litigated all types of discrimination cases, including age, disability, race, national origin, sex, harassment and retaliation.

Additionally, Angelo regularly assists employers to promote an issue-free work environment through counseling, training and other preventive strategies. He also conducts training on employment-related issues for management personnel, lawyers and human resources professionals and is a regular speaker before business organizations and human resource groups on a wide variety of employment law topics.

He also works with global employers regarding their U. S. employment law-related needs and cross-border human resources issues. Angelo is a core member of Littler’s Wage & Hour, Healthcare and International Law Practice Groups.

He is a 1999 graduate of George Washington University Law School.


Theresa M. Waugh, of counsel to the Littler Mendelson firm in Atlanta, focuses her practice on the litigation of employment matters.

Theresa defends clients in state and federal trial and appellate courts, administrative agencies, and before the American Arbitration Association. She has defended a number of class and collective actions at both the state and federal levels. Theresa frequently assists home care organizations defending against lawsuits arising in the wage and hour context and she assists companies in all industries in responding to wage and hour investigations by the Department of Labor and state agencies. In addition to her litigation practice, Theresa regularly advises clients on a wide variety of employment issues. 

After law school, Theresa served as a law clerk to the Hon. David M. Borden of the Connecticut Supreme Court. She holds a master's degree in human resources management and worked for a Fortune 50 computer corporation as a human resources specialist prior to attending law school. She is a 1998 graduate of the University of Connecticut School of Law.

Jessie M. Brown is an associate with Littler Mendelson in the Atlanta office. advises and represents employers in all areas of labor and employment law.

Jessie has experience defending home care and hospitality employers against complex class and collective action lawsuits involving overtime, misclassification, and other wage-related issues. She also assists companies in responding to wage and hour investigations by the U.S. Department of Labor. In addition to her litigation practice, Jessie regularly advises clients on a wide variety of proactive compliance measures related to employment law. 

Jessie served as a judicial clerk for Hon. William M. Acker, Jr. of the U.S. District Court, Northern District of Alabama, and as a judicial intern for Hon. Mary Grace Diehl of the U.S. Bankruptcy Court, Northern District of Georgia. In addition, she clerked for a law firm in Atlanta, was a legal writing teaching assistant, and was the Executive Symposium Editor of the Emory Law Journal

She is a 2013 graduate of Emory University School of La.