Test-Taking: Legal Tests for Work Comp & FLSA
We have heard from several agents recently about misconceptions being circulated on whether the statutory test has changed for determining who is an employee for the purposes of workers’ compensation insurance. To be clear, the statutory test for determining whether a worker is an independent contractor or employee for workers’ comp purposes has not changed. It is still the 7-factor test that can be found in T.C.A. § 50-6-102(12)(D). These factors are:
(a) The right to control the conduct of the work;
(b) The right of termination;
(c) The method of payment;
(d) The freedom to select and hire helpers;
(e) The furnishing of tools & equipment;
(f) Self-scheduling of working hours; and
(g) The freedom to offer services to other entities.
There was a bill which was recently signed by the Governor that changed the test for several other employment laws, including unemployment compensation and labor standards, to a twenty-factor test originally developed by the IRS. However, workers’ compensation was specifically excluded from the application of this bill.
In other employment test news, we wanted to be sure you were aware of the test for determining employees under the Fair Labor Standards Act (FLSA) for the purposes of your business. The FLSA defines the 40-hour workweek, establishes the federal minimum wage, sets overtime and child labor restrictions, and other employment regulations. The FLSA applies to nearly all businesses and almost certainly to your agency. On April 29, 2019, the U.S. Dept of Labor issued an opinion letter laying out the factors for determining employment status for the purposes of FLSA:
(1) The nature and degree of the potential employer’s control;
(2) The permanency of the worker’s relationship with the potential employer;
(3) The amount of the worker’s investment in facilities, equipment, or helpers;
(4) The amount of skill, initiative, judgment, or foresight required for the worker’s services;
(5) The worker’s opportunities for profit or loss; and
(6) The extent of integration of the worker’s services into the potential employer’s business.
Please give us a call if you ever have questions about these tests or their impact on your business. The link to the USDOL Opinion letter can be found at https://www.dol.gov/whd/opinion/FLSA/2019/2019_04_29_06_FLSA.pdf