Wage and Hour Concludes Service Providers for Virtual Marketplace Company Are Independent Contractors

To make the determination, WHD applied what DOL described as "its longstanding and unchanged six-factor balancing test, derived from Supreme Court precedent."

The U.S. Department of Labor announced April 29 that its Wage and Hour Division has issued a new opinion letter that addresses compliance issues related to the Fair Labor Standards Act. The opinion letter concludes that a service provider for a virtual marketplace company is an independent contractor, not an employee, under the act.

An opinion letter is an official, written opinion by the division on how a particular law applies in specific circumstances presented by the individual person or entity that requested the letter.

To make the determination, WHD applied what DOL described as "its longstanding and unchanged six-factor balancing test, derived from Supreme Court precedent." The factors are:

  • The nature and degree of the potential employer's control
  • The permanency of the worker's relationship with the potential employer
  • The amount of the worker's investment in facilities, equipment, or helpers
  • The amount of skill, initiative, judgment, or foresight required for the worker's services
  • The worker's opportunities for profit or loss
  • The extent of integration of the worker's services into the potential employer's business

"An important role of the U.S. Department of Labor is to ensure that employers who want to do the right thing have clear compliance assistance," said Keith Sonderling, acting administrator of the division. "Today, the U.S. Department of Labor offers further insight into the nexus of current labor law and innovations in the job market."

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