Federal Department of Labor clarifies definition of 'employee'

The U.S. Department of Labor (DOL) is tasked with enforcing the laws and regulations that govern employer-employee relationships. As such, the department sometimes issues clarifications or guidance with regard to how it will interpret those laws and regulations. A recent publication by the DOL has done just that for the definition of the word "employee," and Oklahoma businesses and workers may want to take notice.

This particular guidance was put out by the DOL's wage and hour division, and while it is not a new regulation, it seeks to clarify who is an "employee" and who is an "independent contractor." The distinction is very important to both workers and companies, as employees are subject to minimum wage and overtime laws, while contractors are not. The DOL's statement claims that it believes that many workers are misclassified by employers, and that the number of these misclassifications is growing.

The DOL explained that the definition of employee that it will be using is more expansive than the original "common law" one, and that the department will look to whether a worker is truly in business for him or herself, or if he or she is "economically dependent" on the employer. The DOL says part of the reason for the clarification is that it believes employers who are correctly categorizing their workers are being put at a competitive disadvantage. However, some in the field of employment litigation feel that the more expansive definition is calculated to punish certain employers who use independent contractors, and predict that it will lead to more lawsuits dealing with wage and hour claims.

Oklahoma workers should remember that they have certain rights guaranteed by federal and state law, and employers need to understand how to classify their workers correctly to avoid scrutiny and possible sanctions by the DOL. Everyone who has questions about this clarification and how it may affect them, might want to consider contacting an experienced Oklahoma employment lawyer.

Source: news9.com, "Employee or contractor? Labor seeks to clarify rules," Christopher S. Rugaber, July 15, 2015