Josh runs a local courier service. He decides which jobs to accept and negotiates delivery fees with customers. When a customer calls, Josh looks at the roster of drivers and goes down the list until he finds a driver to handle the job.
His couriers are part-timers and include college students, stay at home moms, and a few Uber drivers. He treats everyone as an independent contractor because they use their own vehicles and set their own hours. All Josh requires is a clean driving record and proof of insurance.
Yesterday, Ron, a college student driver, was involved in a fender bender while making a delivery. Ron is desperate to avoid telling his parents about the car. His parents bought the car for him as a reward for dropping his beer and pizza plan for college studies and getting serious about graduating.
Ron asks Josh to help pay for the repairs but Josh declines. He points out that Ron is an independent contractor, not an employee. Josh adds that it’s not his fault Ron was talking on his cell phone while driving and not paying attention to the traffic signals.
So Ron calls his mom to give her a hint that the car insurance premium may, possibly, kind of, increase due to unforeseen circumstances. Like any experienced mother, Ron’s mom gets the real story within minutes. After she finishes explaining that idiots who can’t multitask shouldn’t try to drive and talk at the same time, she asks for more details about Josh’s courier business.
Ron’s mom works in HR for a major corporation and she’s just read about the U.S. Department of Labor’s new “economic realities” test. She thinks that Ron is actually an employee and not an independent contractor.
What should Ron’s mom do next?
- She can use her HR experience to compare Ron’s description of how the courier business is run to the DOL test and assess whether he’s an employee.
- She can ask one of the corporate attorneys at her company to give her an off-the-record assessment of the DOL test.
- She can contact Josh directly to argue that he should pay for the auto repairs because she believes her son is actually an employee of Josh’s business.
DOL released guidance on their new “economic realities” test about a year ago. This new test looks at whether a worker is economically dependent on the “employer”. If yes, then the worker is an employee under the Fair Labor Standards Act (FLSA). Expect to hear much more about this test.
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