FLSA Re-Interpretation May Change I-9 Practice

The September 2015 MSEC Bulletin addressed a document issued in July by the U.S. Department of Labor’s Wage and Hour Division (DOL) concerning a re-interpretation of the standards for classifying a worker as an independent contractor under the Fair Labor Standards Act (FLSA). Employers reclassifying workers as employees need to consider whether this will also affect their I-9 practices.

The I-9 is not required for independent contractors or their employees. However, the laws underlying the I-9 obligation do not define these terms. How do you know who is an independent contractor? I-9 practice relies on the FLSA for these definitions, so a change in how the FLSA is interpreted can change I-9 practice, too.

Worker classification under FLSA has primarily been determined using the “control test,” which focuses on whether the employer controls the worker and the worker’s activity on the employer’s behalf. Issues under this test include who has control over the terms of employment, such as hours worked, methods used to do the work, who provides tools and equipment, who supervises the worker, and the like.

As the Bulletin article highlighted, the DOL now advocates a different definition for distinguishing employees from independent contractors, which probes whether the worker is economically dependent on the employer. The article concludes: “The practical effect of this new guidance is that more workers will fail the definition of ‘independent contractor.’”

If reclassification from independent contractor to employee is appropriate, the employer will need to create and retain a Form I-9 for that employee. If the employer is enrolled in E-Verify, it should initiate the E-Verify query once the Form I-9 has been created. A consequence of worker reclassification is that neither the Form I-9 nor the E-Verify query will be completed timely under the law. Therefore, the employer will need to compose and attach an explanation to the Form I-9 and enter a brief explanation into the E-Verify drop-down menu concerning the late filing.

Please contact MSEC for assistance with immigration issues or proper classification of employees under the FLSA.