# Independent Contractor Status Under the Fair Labor Standards Act

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2020-21018

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** September 25, 2020
- **Citation:** 85 FR 60600

## Text

DEPARTMENT OF LABOR
Wage and Hour Division
29 CFR Parts 780, 788, and 795
RIN 1235-AA34
Independent Contractor Status Under the Fair Labor Standards Act

AGENCY:

Wage and Hour Division, Department of Labor.

ACTION:

Notice of proposed rulemaking and request for comments.

SUMMARY:

The U.S. Department of Labor (the Department) is revising its interpretation of independent contractor status under the Fair Labor Standards Act (FLSA or Act) in order to promote certainty for stakeholders, reduce litigation, and encourage innovation in the economy.

DATES:

Submit written comments on or before October 26, 2020.

ADDRESSES:

You may submit comments, identified by Regulatory Information Number (RIN) 1235-AA34, by either of the following methods:
Electronic Comments:
Submit comments through the Federal eRulemaking Portal at
http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail:
Address written submissions to Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, DC 20210.
Instructions:
Please submit only one copy of your comments by only one method. Commenters submitting file attachments on
www.regulations.gov
are advised that uploading text-recognized documents—
i.e.,
documents in a native file format or documents which have undergone optical character recognition (OCR)—enable staff at the Department to more easily search and retrieve specific content included in your comment for consideration. Please be advised that comments received will become a matter of public record and will be posted without change to
http://www.regulations.gov,
including any personal information provided. All comments must be received by 11:59 p.m. on October 26, 2020 for consideration in this rulemaking. Commenters should transmit comments early to ensure timely receipt prior to the close of the comment period, as the Department continues to experience delays in the receipt of mail. Submit only one copy of your comments by only one method.
Docket:
For access to the docket to read background documents or comments, go to the Federal eRulemaking Portal at
http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Amy DeBisschop, Division of Regulations, Legislation, and Interpretation, Wage and Hour Division (WHD), U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-free number). Copies of this Notice of Proposed Rulemaking (NPRM) may be obtained in alternative formats (Large Print, Braille, Audio Tape or Disc), upon request, by calling (202) 693-0675 (this is not a toll-free number). TTY/TDD callers may dial toll-free 1-877-889-5627 to obtain information or request materials in alternative formats.

Questions of interpretation and/or enforcement of the agency's regulations may be directed to the nearest WHD district office. Locate the nearest office by calling WHD's toll-free help line at (866) 4US-WAGE ((866) 487-9243) between 8 a.m. and 5 p.m. in your local time zone, or logging onto WHD's website for a nationwide listing of WHD district and area offices at
http://www.dol.gov/whd/america2.htm.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

The FLSA requires covered employers to pay their nonexempt employees at least the federal minimum wage for every hour worked and overtime pay for every hour worked over 40 in a workweek, and mandates that employers keep certain records regarding their employees. A worker who performs services for an individual or entity (“person” as defined in the Act) as an independent contractor, however, is not that person's employee under the Act. Thus, the FLSA does not require such person to pay an independent contractor either the minimum wage or overtime pay, nor does it require that person to keep records regarding that independent contractor. The Act does not define the term “independent contractor,” but it defines “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee,” 29 U.S.C. 203(d), “employee” as “any individual employed by an employer,”
id.
at 203(e), and “employ” as “includ[ing] to suffer or permit to work,”
id.
at 203(g).
See also
Fair Labor Standards Amendments of 1974, Public Law 93-259 (Apr. 8, 1974). Courts and the Department have long interpreted the “suffer or permit” standard to require an evaluation of the extent of the worker's economic dependence on the potential employer—
i.e.,
the putative employer or alleged employer—and have developed a multifactor test to analyze whether a worker is an employee or an independent contractor under the FLSA. The ultimate inquiry is whether, as a matter of economic reality, the worker is dependent on a particular individual, business, or organization for work (and is thus an employee) or is in business for him- or herself (and is thus an independent contractor). But the test's underpinning and the process for its application lack focus and have not always been sufficiently explained by courts or the Department, resulting in uncertainty among the regulated community. The Department believes that clear articulation will lead to increased precision and predictability in the economic reality test's application, which will in turn benefit workers and businesses and encourage innovation and flexibility in the economy.

Accordingly, in this Notice of Proposed Rulemaking (NPRM) the Department proposes to introduce a new part to Title 29 of the Code of Federal Regulations setting forth its interpretation of the FLSA as relevant to the question whether workers are “employees” or are independent contractors under the Act. The proposed regulations would adopt general interpretations to which courts and the Department have long adhered. For example, the proposed regulations would explain that independent contractors are workers who, as a matter of economic reality, are in business for themselves as opposed to being economically dependent on the potential employer for work. The proposed regulations would also explain that the inquiry into economic dependence is conducted through application of several factors, with no one factor being dispositive, and that actual practices are entitled to greater weight than what may be contractually or theoretically possible. The Department proposes to sharpen this inquiry into five distinct factors, instead of the five or more overlapping factors used by most courts and the Department previously. Moreover, consistent with the FLSA's text, its purpose, and the Department's experience administrating and enforcing it, the Department proposes that two of those factors—the nature and degree of the worker's control over the work and the worker's opportunity for profit or loss—should be more probative of the question of economic dependence or lack thereof, and thus are afforded greater weight in the analysis than any others.

This proposed rule would be the Department's sole and authoritative

interpretation of independent contractor status under the FLSA. As such, it would replace the Department's previous interpretations of independent contractor status under the FLSA in certain contexts, including interpretations found at 29 CFR 780.330(b) (interpreting independent contractor status under the FLSA for tenants and sharecroppers) and 29 CFR 788.16(a) (interpreting independent contractor status under the FLSA for certain forestry and logging workers). The Department believes this proposal will significantly clarify to stakeholders how to distinguish between employees and independent contractors under the Act and seeks comment on all aspects of this proposed rule.

This proposed rule is expected to be an Executive Order (E.O.) 13771 deregulatory action. Details on the estimated increased efficiency and cost savings of this proposed rule can be found in the preliminary regulatory impact analysis (PRIA) provided below in section VI.

II. Background

A. Relevant FLSA Definitions

Enacted in 1938, the FLSA requires, among other provisions, that covered employers pay their nonexempt employees at least the federal minimum wage for every hour worked and overtime pay for every hour worked over 40 in a workweek, and mandates that employers keep certain records regarding their employees.
1

The FLSA does not define the term “independent contractor.” The Act defines “employer” in section 3(d) to “include[ ] any person acting directly or indirectly in the interest of an employer in relation to an employee,” “employee” in section 3(e)(1) to mean “any individual employed by an employer,” and “employ” in section 3(g) to include “to suffer or permit to work.”
2

The Supreme Court has recognized that “there is in the [FLSA] no definition that solves problems as to the limits of the employer-employee relationship under the Act.”
Rutherford Food Corp.
v.
McComb,
331 U.S. 722, 728 (1947).

1

See
29 U.S.C. 206(a), 207(a) (minimum wage and overtime pay requirements); 29 U.S.C. 211(c) (recordkeeping requirements).

2
29 U.S.C. 203(d), (e), (g). The Act defines a “person” as “an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons.” 29 U.S.C. 203(a).

The Supreme Court has held that the “suffer or permit” definition is broad on its face and is more inclusive than the common law standard for determining who is employed and thereby who is an employee. The common law utilizes traditional agency principles exclusively to examine the hiring party's right to control the manner and means by which the worker accomplishes his or her task.
See Nationwide Mut. Ins. Co.
v.
Darden,
503 U.S. 318, 326 (1992) (“[T]he FLSA . . . defines the verb `employ' expansively to mean `suffer or permit to work.' This . . . definition, whose striking breadth we have previously noted, stretches the meaning of `employee' to cover some parties who might not qualify as such under a strict application of traditional agency law principles.” (citations omitted));
Walling
v.
Portland Terminal Co.,
330 U.S. 148, 150-51 (1947) (“But in determining who are `employees' under the Act, common law employee categories or employer-employee classifications under other statutes are not of controlling significance. This Act contains its own definitions, comprehensive enough to require its application to many persons and working relationships, which prior to this Act, were not deemed to fall within an employer-employee category.” (citations omitted));
Rutherford Food,
331 U.S. at 728 (“The [FLSA] definition of `employ' is broad.”).

However, the Act's “statutory definition[s] . . . have [their] limits.”
Tony & Susan Alamo Found.
v.
Sec'y of Labor,
471 U.S. 290, 295 (1985) (internal citation omitted);
see also Portland Terminal,
330 U.S. at 152 (“The definition `suffer or permit to work' was obviously not intended to stamp all persons as employees.”). For example, the Supreme Court recognized not long after the FLSA's passage that, despite the Act's broad definition of “employ,” “[t]here may be independent contractors who take part in production or distribution who would alone be responsible for the wages and hours of their own employees.”
Rutherford Food,
331 U.S. at 729. Accordingly, federal courts of appeals have uniformly held, and the Department has consistently maintained, that independent contractors are not “employees” for purposes of the FLSA.
See, e.g., Saleem
v.
Corporate Transp. Group, Ltd.,
854 F.3d 131, 139-40 (2d Cir. 2017) (noting that independent contractors are separate from employees in the context of the FLSA);
Karlson
v.
Action Process Serv. & Private Investigation, LLC,
860 F.3d 1089, 1092 (8th Cir. 2017) (“FLSA wage and hour requirements do not apply to true independent contractors.”);
Scantland
v.
Jeffry Knight, Inc.,
721 F.3d 1308, 1311 (11th Cir. 2013) (“[The Act's] `broad' definitions do not, however, bring `independent contractors' within the FLSA's ambit.”);
Hopkins
v.
Cornerstone America,
545 F.3d 338, 342 (5th Cir. 2008) (observing that the “FLSA applies to employees but not to independent contractors”).

Accordingly, the FLSA does not require any “person” to pay an independent contractor the minimum wage or overtime pay under sections 6(a) and 7(a) or to keep records regarding that independent contractor under section 11(c).

B. Economic Dependence and the Economic Reality Test

1. Supreme Court Development of the Economic Reality Test

In a series of cases from 1944 to 1947, the U.S. Supreme Court explored the limits of the employer-employee relationship under three different federal statutes: The FLSA, the National Labor Relations Act (NLRA), and the Social Security Act (SSA).

In the first of those cases,
NLRB
v.
Hearst Publications, Inc.,
322 U.S. 111 (1944), the Court considered the meaning of “employee” under the NLRA, which merely defined the term to “include any employee.”
Id.
at 118-20. The Court explained that the meaning of employee “takes color from its surroundings . . . [in] the statute where it appears, and derives meaning from the context of that statute, which must be read in the light of the mischief to be corrected and the end to be attained.”
Id.
at 124 (citations omitted). The
Hearst
Court rejected application of the common law standard alone,
see id.
at 123-25, and concluded that “the broad language of the [NLRA's] definitions . . . leaves no doubt that its applicability is to be determined broadly, in doubtful situations, by underlying economic facts rather than technically and exclusively by previously established legal classifications.”
Id.
at 129. Congress's reaction to
Hearst'
s interpretation of “employee” under the NLRA “was adverse,” and on June 23, 1947, Congress amended the NLRA “with the obvious purpose of hav[ing] the Board and the courts apply general agency principles in distinguishing between employees and independent contractors under the [NLRA].”
NLRB
v.
United Ins. Co. of Am.,
390 U.S. 254, 256 (1968).

On June 16, 1947, one week before Congress amended the NLRA to abrogate
Hearst,
the Supreme Court decided
United States
v.
Silk,
331 U.S. 704 (1947), which addressed the distinction between employees and independent contractors under the SSA. In that case, the Court favorably summarized
Hearst
as setting forth

“economic reality,” as opposed to “technical concepts” of the common law standard alone, as the framework for determining workers' classification.
Id.
at 712-14. But it also acknowledged that not “all who render service to an industry are employees.”
Id.
Although the Court found it to be “quite impossible to extract from the [SSA] a rule of thumb to define the limits of the employer-employe[e] relationship,” the Court identified five factors as “important for decision”: “degrees of control, opportunities for profit or loss, investment in facilities, permanency of relation[,] and skill required in the claimed independent operation.”
Id.
at 716. The Court added that “[n]o one [factor] is controlling nor is the list complete.”
Id.
Just a week after
Silk,
on June 23, 1947, the Court reiterated these five factors in another case involving employee or independent contractor status under the SSA.
See Bartels
v.
Birmingham,
332 U.S. 126, 130 (1947). The Court explained that, under the SSA, employee status “was not to be determined solely by the idea of control which an alleged employer may or could exercise over the details of the service rendered to his business by the worker.”
Id.
Although “control is characteristically associated with the employer-employee relationship,” employees under “social legislation” such as the SSA are “those who as a matter of economic reality are dependent upon the business to which they render service.”
Id.
Thus, in addition to control, “permanency of the relation, the skill required, the investment in the facilities for work[,] and opportunities for profit or loss from the activities were also factors” to consider.
Id.
Although the Court identified these specific factors as relevant to the analysis, it explained that “[i]t is the total situation that controls” the worker's classification under the SSA.
Id.

Decided the same day as
Silk, Rutherford Food
applied
Hearst'
s and
Silk'
s reasoning to the FLSA.
Rutherford Food
addressed whether certain workers at a plant owned by Kaiser Packing Company (Kaiser) who cut meat from the bones of slaughtered cattle were Kaiser's employees under the FLSA or were instead independent contractors. Noting that “[d]ecisions that define the coverage of the employer-[e]mployee relationship under the [NLRA and the SSA] are persuasive in the consideration of a similar coverage under the [FLSA],” 331 U.S. at 723-24 (citing
Hearst
and
Silk
), the Court seemed to follow the path laid down in these previous cases by examining facts pertaining to the five factors identified in
Silk.
For example, the Court noted that the slaughterhouse workers performed unskilled work “on the production line.”
Id.
at 730. “The premises and equipment of Kaiser were used for the work,” indicating little investment by the workers.
Id.
“The group had no business organization that could or did shift as a unit from one slaughter-house to another,” indicating a permanent work arrangement.
Id.
“The managing official of the plant kept close touch on the operation,” indicating control by the alleged employer.
Id.
And “[w]hile profits to the boners depended upon the efficiency of their work, it was more like piecework than an enterprise that actually depended for success upon the initiative, judgment or foresight of the typical independent contractor.”
Id.

In addition to facts relevant to the five
Silk
factors, the Court also considered whether the work was “a part of the integrated unit of production” (meaning whether the putative independent contractors were integrated into the assembly line alongside the company's employees) to assess whether they were employees or independent contractors under the FLSA.
Id.
at 729-730. Ultimately, the Court agreed with the appellate court that the “underlying economic realities” led to the conclusion that the boners were employees of Kaiser under the FLSA.
See id.
at 727.

In November 1947, five months after
Silk
and
Rutherford Food,
the Department of Treasury (Treasury) proposed regulations governing the determination of whether an individual is an independent contractor or employee under the SSA, which used a test that balanced the following factors:

1. Degree of control of the individual;

2. Permanency of relation;

3. Integration of the individual's work in the business to which he renders service;

4. Skill required by the individual;

5. Investment by the individual in facilities for work; and

6. Opportunity of the individual for profit or loss.

12 FR 7966. Factors 1, 2, and 4-6 corresponded directly with the five factors identified as being “important for decision” in
Silk,
331 U.S. at 716, and the third factor corresponded with
Rutherford Food'
s consideration of the fact that the workers were “part of an integrated unit of production.” 331 U.S. at 729. The Treasury proposal further relied on
Bartels,
332 U.S. at 130, to apply these factors to determine whether a worker was “dependent as a matter of economic reality upon the business to which he renders services.” 12 FR 7966.

However, in 1948, Congress promptly rejected this application of the proposed test. A committee report described the test as “`a dimensionless and amorphous abstraction' ” that would confer upon “ `the administrative agencies and the courts an unbridled license to say, at will, whether an individual is an employee or an independent contractor' ” for purposes of the SSA.
United States
v.
W.M. Webb, Inc.,
397 U.S. 179, 187-88 (1970) (quoting S. Rep. No. 1255, at 12 (1948) and H.R. Rep. No. 2168, at 9 (1948)). The report stated that Congress amended the SSA to “avoid[ ] the uncertainty of the proposed `economic reality' test” and to ensure that the common law control definition of employee alone would apply to that statute.
See id.
at 183-86, 191; 42 U.S.C. 410(j) (“The term `employee' [under the SSA] means . . . any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee.”).

Congress abrogated the interpretations of the definitions of “employee” adopted in
Hearst
for the NLRA and in
Silk
and
Bartels
for the SSA “to demonstrate that the usual common-law principles were the keys to meaning.”
Darden,
503 U.S. at 324-25. However, Congress did not similarly amend the FLSA. Thus, the Supreme Court stated in
Darden
that the scope of employment under the FLSA is broader than that under common law and is determined by the economic reality of the relationship at issue, relying on the “suffer or permit” standard that is unique to the FLSA.
See id.
However, since implicitly doing so in
Rutherford Food,
the Court has not again applied (or rejected the application of) the
Silk
factors to an FLSA classification question. Accordingly, the Supreme Court has not mandated any specific set or formulation of economic reality factors for purposes of the FLSA, nor has it explicitly opined on any factor's relative probative value to the inquiry.
See Goldberg
v.
Whitaker House Co-op., Inc.,
366 U.S. 28, 33 (1961) (noting that “ `economic reality' rather than `technical concepts' is . . . the test of employment” under the FLSA (citing
Silk,
331 U.S. at 713;
Rutherford Food,
331 U.S. at 729));
Tony & Susan Alamo,
471 U.S. at 301 (“The test of employment under the Act is one of `economic reality.' ” (quoting
Whitaker House,
366 U.S. at 33)).
3

3
In
Whitaker House,
the Supreme Court concluded that certain homeworkers were employees under the FLSA, as opposed to being “self-employed” or “independent.” 366 U.S. at 33.

The Court's analysis did not explicitly mention the
Silk
factors or the concept of economic dependence from
Bartels.
However, the Court focused on the fact that workers were not “selling their products on the market for whatever price they could command,” but were instead “regimented under one organization, manufacturing what the organization desire[d] and receiving the compensation the organization dictates.”
Id.

2. Application of the Economic Reality Test by Federal Courts of Appeals

Following
Rutherford Food,
federal courts of appeals have also stated that the common law standard alone does not determine employee or independent contractor status under the FLSA and that instead the inquiry was one of economic reality.
See, e.g., Wirtz
v.
Dr. Pepper Bottling Co. of Atlanta,
374 F.2d 5, 8 (5th Cir. 1967) (“[C]ommon law concepts of the employer-employee relationship are not controlling.”);
McComb
v.
Homeworkers' Handicraft Coop.,
176 F.2d 633, 636 (4th Cir. 1949) (same). For several decades after
Rutherford Food,
courts applied this reasoning to ask, for example, whether a worker took “the usual path of an employee,”
Dr. Pepper,
347 F.2d at 8, or had characteristics that “resembled . . . the typical independent contractor,”
Schultz
v.
Cadillac Assocs., Inc.,
413 F.2d 1215, 1217 (7th Cir. 1969). But they did not adopt a systematic approach to the question.

In the 1970s and 1980s, federal courts of appeals began to adopt a multifactor “economic reality” test based on
Silk, Rutherford Food,
and
Bartels
similar to Treasury's 1947 proposed SSA regulation to analyze whether a worker was an employee or an independent contractor under the FLSA.
4

4
As explained below, this multifactor economic realty test had also been enforced and articulated by the Department in subregulatory guidance since the 1950s.

Drawing on the Supreme Court precedent discussed above, courts have recognized that the heart of the inquiry is whether “as a matter of economic reality” the workers are “
dependent
upon the business to which they render service.”
Usery
v.
Pilgrim Equip. Co.,
527 F.2d 1308, 1311 (5th Cir. 1976) (quoting
Bartels,
332 U.S. at 130 (emphasis added)). And some courts have clarified that this question of economic dependence may be boiled down to asking “whether the individual is or is not, as a matter of economic fact, in business for himself.”
Donovan
v.
Tehco, Inc.,
642 F.2d 141, 143 (5th Cir. 1981);
see also Parrish
v.
Premier Directional Drilling, L.P.,
917 F.3d 369, 380 (5th Cir. 2019) (“Essentially, our task is to determine whether the individual is, as a matter of economic reality, in business for himself.” (internal quotation marks and citation omitted));
Saleem,
854 F.3d at 139 (“[O]ur ultimate concern [is] whether, as a matter of economic reality, the workers depend upon someone else's business for the opportunity to render service or are in business for themselves.” (internal quotation marks and citations omitted));
Baker
v.
Flint Eng'g & Constr. Co.,
137 F.3d 1436, 1443 (10th Cir. 1998) (“Our final step is to review the findings on each of the above factors and determine whether plaintiffs, as a matter of economic fact, depend upon [the employer's] business for the opportunity to render service, or are in business for themselves.”). Courts have emphasized that the inquiry into the level and nature of dependence in a given relationship should be based on the totality of the circumstances.
See, e.g., Donovan
v.
DialAmerica Mktg., Inc.,
757 F.2d 1376, 1382 (3d Cir. 1985) (noting that
Rutherford Food
“emphasized that the circumstances of the whole activity should be considered . . .”). But these courts have also explained that a non-exhaustive, standard set of factors—derived from
Silk
and
Rutherford
—shape and guide this inquiry.
See, e.g., Usery,
527 F.2d at 1311 (identifying “[f]ive considerations [which] have been set out as aids to making the determination of dependence, vel non”);
Real
v.
Driscoll Strawberry Assocs., Inc.,
603 F.2d 748, 754 (9th Cir. 1979) (articulating a six-factor test).

In
Driscoll,
the Ninth Circuit Court of Appeals described its six-factor test as follows:

1. The degree of the alleged employer's right to control the manner in which the work is to be performed;

2. the alleged employee's opportunity for profit or loss depending on his managerial skill;

3. the alleged employee's investment in equipment or materials required for his task, or his employment of helpers;

4. whether the service rendered requires a special skill;

5. the degree of permanency of the working relationship; and

6. whether the service rendered is an integral part of the alleged employer's business.

Id.
at 754. Most courts of appeals articulate a similar test, but application between courts may vary significantly.
See, e.g., Sec'y of Labor
v.
Lauritzen,
835 F.2d 1529, 1534-35 (7th Cir. 1987);
DialAmerica Mktg.,
757 F.2d at 1382;
Donovan
v.
Brandel,
736 F.2d 1114, 1117 (6th Cir. 1984). For example, the Second Circuit has analyzed opportunity for profit or loss and investment (the second and third factors listed above) together as one factor.
See, e.g., Brock
v.
Superior Care, Inc.,
840 F.2d 1054, 1058 (2d Cir. 1988). And the Fifth Circuit has not adopted the sixth factor listed above, which analyzes the integrality of the work.
See, e.g., Usery,
527 F.2d at 1311.

A few courts of appeals have adopted noteworthy modifications to the economic reality factors as originally articulated in 1947 by the Supreme Court and by the Treasury Department.
Compare, e.g., DialAmerica Mktg.,
757 F.2d at 1382,
with Silk,
331 U.S. at 716,
and
12 FR 7966. First, the “skill required” factor identified in
Silk,
331 U.S. at 716, is now articulated more expansively by some courts of appeals as including consideration of “initiative.”
See, e.g.,

Parrish,
917 F.3d at 379 (“the skill and initiative required in performing the job”);
Karlson,
860 F.3d at 1093 (same);
Superior Care,
840 F.2d at 1058-59 (“the degree of skill and independent initiative required to perform the work”). Second,
Silk
analyzed workers' investments, 331 U.S. at 717-19, and the investment factor was articulated in the proposed 1947 Treasury regulation as evaluating “investments
by the individual
in facilities for work.” 12 FR 7966 (emphasis added). However, the Fifth Circuit Court of Appeals has modified the “investment” factor to consider “the extent of the relative investments of the worker and the alleged employer.”
Hopkins,
545 F.3d at 343. Some other circuits have adopted this “relative investment” approach but continue to use the phrase “worker's investment” to describe the factor.
See, e.g., Keller
v.
Miri Microsystems LLC,
781 F.3d 799, 810 (6th Cir. 2015);
Dole
v.
Snell,
875 F.2d 802, 805 (10th Cir. 1989).

Third, although the permanence factor under
Silk
was understood in the 1947 Treasury proposal to mean the continuity and duration of working relationships,
see
12 FR 7967, some courts of appeals have expanded this factor to also consider the exclusivity of such relationships.
See, e.g., Scantland,
721 F.3d at 1319;
Keller,
781 F.3d at 807. Finally,
Rutherford Food'
s consideration of whether work is “part of an integrated unit of production,” 331 U.S. at 729—which was articulated as “integration of the individual's work” in the 1947 Treasury proposal, 12 FR 7966—is now typically articulated by many courts of appeal as whether the service rendered is “integral,” which those courts have mistakenly applied as meaning important or central to the potential employer's business.
See, e.g., Verma
v.
3001 Castor, Inc.,
937 F.3d 221, 229 (3rd Cir. 2019) (concluding that workers' services were integral because they were the providers of the business's “primary offering”);
Acosta

v.
Off Duty Police Servs., Inc.,
915 F.3d 1050, 1055 (6th Cir. 2019) (concluding that services provided by workers were “integral” because the putative employer “built its business around” those services);
McFeeley,
825 F.3d at 244 (consideration “the importance of the services rendered to the company's business”);
DialAmerica,
757 F.2d at 1385 (“[W]orkers are more likely to be `employees' under the FLSA if they perform the primary work of the alleged employer.”).

Courts of appeals applying the multifactor economic reality test draw from the totality of circumstances, with no single factor being determinative by itself.
See, e.g., Keller,
781 F.3d at 807 (“No one factor is determinative.”);
Baker,
137 F.3d at 1440 (“None of the factors alone is dispositive; instead, the court must employ a totality-of-the-circumstances approach.”);
Martin
v.
Selker Bros.,
949 F.2d 1286, 1293 (3rd Cir. 1991) (“It is a well-established principle that the determination of the employment relationship does not depend on isolated factors . . . neither the presence nor the absence of any particular factor is dispositive.”).

3. Application of the Economic Reality Test by WHD

Since at least 1954, WHD has applied a multifactor analysis when considering whether a worker is an employee under the FLSA or is instead an independent contractor.
See
WHD Opinion Letter (Aug. 13, 1954) (applying six factors very similar to the six economic reality factors currently used by courts of appeal and noting that “the determination depends on the circumstances of the whole activity considered in light of the statutory purposes of the Act” (internal quotation marks omitted)). In 1956, WHD reiterated the six factors and noted that “[t]he degree of control retained by the principal has [been] rejected as the sole criterion to be applied.” WHD Opinion Letter (Feb. 8, 1956). In 1964, WHD stated: “The Supreme Court has made it clear that an employee, as distinguished from a person who is engaged in a business of his own, is one who as a matter of economic reality follows the usual path of an employee and is dependent on the business which he serves.” WHD Opinion Letter FLSA-795 (Sept. 30, 1964).

Over the years since, WHD has issued numerous opinion letters addressing whether a worker is an employee under the FLSA or an independent contractor. In those letters, WHD has generally relied on a multifactor analysis very similar to the six economic reality factors identified above; the circumstances of the whole activity are considered; the inquiry is broader than the common law control standard alone; and a worker is an employee if, as a matter of economic reality, he or she is economically dependent on the employer as opposed to in business for him- or herself.
5

WHD has also promulgated regulations applying a multifactor analysis for independent contractor status under the FLSA in certain specific industries.
See, e.g.,
29 CFR 780.330(b) (applying a six factor economic reality test to determine whether a sharecropper or tenant is an independent contractor or employee under the Act); 29 CFR 788.16(a) (applying a six factor economic reality test in forestry and logging operations with no more than eight employees). And WHD has promulgated a regulation applying a multifactor economic reality analysis for determining independent contractor status under the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).The MSPA regulation is based on the FLSA's definition of “employ” because MSPA incorporates that definition, and it asks “whether or not an
independent contractor
or
employment
relationship exist under the Fair Labor Standards Act.” 29 CFR 500.20(h)(4) (emphasis in original).

5

See, e.g.,
WHD Opinion Letter FLSA2019-6 at 4 (Apr. 29, 2019); WHD Opinion Letter, 2002 WL 32406602, at *2 (Sept. 5, 2002); WHD Opinion Letter, 2000 WL 34444342, at *3 (Dec. 7, 2000); WHD Opinion Letter, 2000 WL 34444352, at *1 (Jul. 5, 2000); WHD Opinion Letter, 1999 WL 1788137, at *1 (Jul. 12, 1999); WHD Opinion Letter, 1995 WL 1032489, at *1 (June 5, 1995); WHD Opinion Letter, 1995 WL 1032469, at *1 (Mar. 2, 1995); WHD Opinion Letter, 1986 WL 740454, at *1 (June 23, 1986); WHD Opinion Letter, 1986 WL 1171083, at *1 (Jan. 14, 1986); WHD Opinion Letter WH-476, 1978 WL 51437, at *2 (Oct. 19, 1978); WHD Opinion Letter WH-361, 1975 WL 40984, at *1 (Oct. 1, 1975); WHD Opinion Letter (Sept. 12, 1969); WHD Opinion Letter (Oct. 12, 1965).

WHD Fact Sheet #13, “Employment Relationship under the Fair Labor Standards Act (FLSA)” (Jul. 2008), similarly states that, when determining whether an employment relationship exists under the FLSA: The common law control is not the exclusive consideration; instead, “it is the total activity or situation which controls”; and “an employee, as distinguished from a person who is engaged in a business of his or her own, is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business which he or she serves.”
6

The Fact Sheet identifies seven economic reality factors; in addition to factors that are similar to the six factors identified above, it also considers the worker's “degree of independent business organization and operation.”
7

6
Fact Sheet #13 is available at
https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/whdfs13.pdf.

7
On July 15, 2015, WHD issued Administrator's Interpretation No. 2015-1, “The Application of the Fair Labor Standards Act's `Suffer or Permit' Standard in the Identification of Employees Who Are Misclassified as Independent Contractors” (AI). The AI provided guidance regarding the employment relationship under the FLSA and the application of the six economic realities factors. The AI was withdrawn on June 7, 2017 and is no longer in effect.

WHD's most recent opinion letter addressing this issue, from 2019, generally applied the principles and factors similar to those described in the prior opinion letters and Fact Sheet #13, but not the “business organization” factor (which it said was “[e]ncompassed within” the other factors). The opinion letter addressed the FLSA classification of service providers who used a virtual marketplace company to be referred to end-market consumers to whom the services were actually provided. WHD concluded that the service providers appeared to be independent contractors and not employees of the virtual marketplace company.
See
WHD Opinion Letter FLSA2019-6 at 7. WHD found that it was “inherently difficult to conceptualize the service providers' `working relationship' with [the virtual marketplace company], because as a matter of economic reality, they are working for the consumer, not [the company].”
Id.
Because “[t]he facts . . . demonstrate economic independence, rather than economic dependence, in the working relationship between [the virtual marketplace company] and its service providers,” WHD opined that they were not employees of the company under the FLSA but rather were independent contractors.
Id.
at 9.

As explained in greater detail below, these prior interpretations of independent contractor status, which themselves have evolved over time, are subject to the same limitations as the court opinions from the same period, and the Department believes that stakeholders would benefit from clarification. As such, the Department is proposing to promulgate a clearer and more consistent standard for evaluating whether a worker is an employee or independent contractor under the FLSA.

III. Need for Rulemaking

The Department has never promulgated a generally applicable regulation addressing the question of who is an independent contractor and, thus, not an employee under the Act. Instead, as described above, the Department has issued and revised subregulatory guidance since at least

1954, using different variations of a multifactor economic reality test that analyzes economic dependence to distinguish independent contractors from employees. The Department has also applied the multifactor test in regulations addressing the meaning of independent contractor in specific industries.
See, e.g.,
29 CFR 780.330(b); 29 CFR 788.16(a); 29 CFR 500.20(h)(4). For reasons explained below, however, that multifactor test, as currently applied, has proven to be unclear and unwieldy. The Department thus proposes to promulgate a regulation that explains the contours of the economic reality test and clarifies and sharpens a test that has become less clear and consistent through decades of case-by-case administration in the courts of appeals. If this proposed rule were finalized, it would contain the Department's sole and authoritative interpretation of independent contractor status under the FLSA. As such, the Department is proposing to strike previous industry-specific interpretations set forth in 29 CFR 780.330(b) and 788.16(a) and replace them with cross-references to the interpretation set forth in this proposed rule. The Department considered making similar revisions to its regulation addressing independent contractor status under the MSPA in 29 CFR 500.20(h)(4), but is not proposing not to make such revisions at this time, as explained further below. The Department invites comments on the need for conforming edits to these or similar provisions.

A. Challenges Presented by the Economic Reality Test and Its Application

The economic reality test has been criticized on several fronts. First, the test's overarching concept of “economic dependence” is under-developed and sometimes inconsistently applied, rendering it a source of confusion. Second, the test is indefinite and amorphous in that it makes all facts potentially relevant without providing any guidance on how to prioritize or balance different and sometimes competing considerations. Third, inefficiency and lack of structure in the test further stem from blurred boundaries between the factors. Fourth, these shortcomings have become more apparent over time as technology, economic conditions, and work relationships have evolved.

1. Confusion Regarding the Meaning of Economic Dependence

Courts and the Department agree that economic dependence is the touchstone of the economic reality test.
See, e.g., Parrish,
917 F.3d at 380;
McFeeley,
825 F.3d at 241;
see also Bartels,
332 U.S. at 130 (noting that the inquiry is whether “as a matter of economic reality,” the worker is “dependent upon the business to which [he or she] render[s] service”). But underdeveloped analysis and inconsistency cloud the application of this touchstone, generating uncertainty both in and outside of litigation. Given the central importance of the economic dependence concept, any confusion on this front is problematic. The 1948 Senate Report criticized Treasury's proposal to rely on economic dependence for determining independent contractor status under the SSA by rhetorically asking: “Who, in this whole world engaged in any sort of service relationship, is not dependent as a matter of economic reality on some other person? The corner grocer, clearly not an employee, is economically dependent upon his customers, his banker, his supplier.” S. Rep. No. 80-1255 at 12 (1948). In other words, “economic dependency is a vague concept that without further explanation and refinement is often difficult, if not impossible, to apply.”
8

8
Bruce Goldstein,
et al., Enforcing Fair Labor Standards in the Modern American Sweatshop: Rediscovering the Statutory Definition of Employment,
46 UCLA L. Rev. 983, 1009 (1999) (collecting cases).

The Department and some courts have attempted to provide a measure of clarity by explaining, for example, that the proper inquiry is “`whether the workers are dependent on a particular business or organization
for their continued employment'
in that line of business,”
Mr. W Fireworks,
814 F.2d at 1054 (emphasis in original) (quoting
DialAmerica,
757 F.2d at 1385), or instead “are in business for themselves,”
Saleem,
854 F.3d at 139. But the Department and many courts have often applied the test without helpful clarification on the meaning of the economic dependency that they are seeking.
9

9

Id.
at 1010.

The lack of explanation of economic dependence has sometimes led to inconsistent approaches and results. For example, the Fifth Circuit held in 2009 that cable splicers hired as putative independent contractors by BellSouth to provide post-Hurricane Katrina repairs along the Gulf Coast were actually employees.
See Cromwell
v.
Driftwood Elec. Contractor, Inc.,
348 F. App'x 57 (5th Cir. 2009). That case applied the same approach to economic dependence as
Mr. W. Fireworks
and similar cases, asking whether “the worker is economically dependent upon the alleged employer or is instead in business for himself.”
Id.
at 59. Less than a year later, a different panel of that same circuit applied a second approach to economic dependence to find another cable splicer hired under a very similar arrangement by the same company to be an independent contractor.
See Thibault
v.
BellSouth Telecommunication,
612 F.3d 843 (5th Cir. 2010).
10

The
Thibault
court distinguished the result in
Cromwell
in part by highlighting the plaintiff's sources of income and wealth other than from BellSouth in the analysis of economic dependence.
Id.
at 849.
11

Thibault'
s reliance on income and wealth sources to analyze economic dependence is incompatible with
Mr. W. Fireworks
and similar decisions, which have repeatedly explained that “[e]conomic dependence is
not
conditioned on reliance on an alleged employer for one's primary source of income, for the necessities of life.” 814 F.2d at 1054 (emphasis in original).
12

10
In both cases, the splicers performed post-Hurricane Katrina repairs for BellSouth along the Gulf Coast; provided their own tools and trucks; received assignments in the same manner; received neither training nor close supervision; and worked the same 12-hour shifts for 13 days at a time.
Compare Cromwell,
348 F. App'x at 58-59,
with Thibault,
612 F.3d at 844-49.

11
Specifically, Mr. Thibault earned significant profits from his own sales company, “owned eight drag-race cars [that] generated $1,478 in income from racing professionally[,]” and managed “commercial rental property that generated some income.”
Thibault,
612 F.3d at 849. The
Thibault
court also highlighted the fact that Mr. Thibault worked for only three months—although he intended to work for seven or eight months—before being fired.
Id.
at 846, 849. In contrast, the splicers in
Cromwell
worked approximately eleventh months. 348 F. App'x at 58.

12

See also Off Duty Police,
915 F.3d at 1058 (“[W]hether a worker has more than one source of income says little about that worker's employment status.”);
DialAmerica,
757 F.2d at 1385 (“The economic-dependence aspect of the [economic reality] test does not concern whether the workers at issue depend on the money they earn for obtaining the necessities of life.”).

The Department agrees with
Mr. W Fireworks
and similar courts that “the proper test of economic dependence . . . `examines whether the workers are dependent on a particular business or organization for
their continued employment.' ” Id.
(quoting
DialAmerica,
757 F.2d at 1385);
see also Halferty,
821 F.2d at 268 (“[I]t is not dependence in the sense that one could not survive without the income from the job that we examine, but dependence for continued employment.”). Dependence for work as opposed to income comports with the FLSA's “suffer or permit” standard for employment relationship. 29 U.S.C. 203(g). An individual who depends on a potential employer for work is an employee whom the

employer suffers or permits to work. In contrast, an independent contractor does not work at the sufferance or permission of an employer because, as a matter of economic reality, he or she is in business for him- or herself.
See Saleem,
854 F.3d at 139.

Without a consistent understanding of economic dependence, the multifactor balancing test is left without a meaningful anchor. As a result, the test's factors may become “an end in themselves” instead of, as they are intended to be, guideposts in the inquiry of economic dependence or lack thereof.
13

For example, in
Parrish,
917 F.3d 369, the Fifth Circuit appears to have applied three different concepts of economic dependence in a single opinion to analyze the control, opportunity for profit or loss, and investment factors. First, the court analyzed the control factor through the same concept of dependence as
Mr. W Fireworks,
announcing that “our task is to determine whether the individual is, as a matter of economic reality, in business for himself.”
Parrish,
917 F.3d at 379. The
Parrish
court reasoned that mandated “safety training and drug testing, when working at an
oil-drilling site,
is not the type of control that counsels in favor of employee status.”
Id.
at 382 (emphasis in original). This analysis is consistent with the “in business for himself” approach because an oil-drilling company reasonably would require safety and drug testing of both employees (who depend on the company for work) and independent contractors (who are in business for themselves), since an accident could pose potentially significant risks to the worksite and to workers, regardless whether caused by an employee or an independent contractor.

13

Goldstein, supra
note 8 at 1010.

The
Parrish
court then expressly departed from
Mr. W Fireworks
in favor of
Thibault'
s dependence-for-income approach to analyze the opportunity for profit or loss factor.
Id.
at 384. Specifically, the court held that the consultant was an independent contractor, in part, because he also earned income from his own goat farm.
See id.
at 383 (“
Thibault
is more on point [than
Mr. W. Fireworks
]. Accordingly we consider . . . plaintiffs' enterprises, such as the goat farm, as a part of the overall analysis of how dependent plaintiffs were on [defendant].”). But the goat farm has absolutely nothing to do with whether the worker was in business for himself as a consultant or was “dependent on a particular business or organization for [his] continued employment in that line of business.”
Mr. W Fireworks,
814 F.2d at 1054. Put another way, the economic reality analysis should ask whether the plaintiff had “opportunity for profit or loss . . . in the claimed independent operations,”
Silk,
331 U.S. at 716, which in
Parrish
was consulting, not goat farming.

The
Parrish
court impliedly took yet a third approach to economic dependence when it analyzed the investment factor by comparing the dollar value of “each worker's
individual
investment” to the investment made by an oil drilling company in its overall operations: “Obviously, [the drilling company] invested more money at a drill site compared to each plaintiff's investments.”
Id.
at 383 (emphasis in original). That comparison was unresponsive to the economic dependence inquiry of whether the worker is “[e]ssentially . . . in business for himself,”
id.
at 379, because large companies routinely contract for services with smaller entrepreneurs. Instead, the worker's investment (or lack thereof) should have been analyzed to determine whether the worker had an independent operation, distinct from the potential employer's business, which created an opportunity for profit or loss.

The 1948 Senate Report cautioned that economic dependence was potentially “dimensionless.” And although courts and the Department have since added some guidance, the concept may be inconsistently applied and under-analyzed. A more developed and dependable touchstone at the heart of the economic reality test is needed to guide the regulated community. Under this proposal, the Department would interpret and apply “economic dependence” consistent with the foregoing discussion.

2. The Lack of Focus in the Multifactor Balancing Test

Under the test, the Department and courts analyze the totality of circumstances making up the economic reality of the relationship to determine a worker's classification. But, as Judge Easterbrook warned in 1987, “ `reality' encompasses millions of facts, and unless we have a legal rule with which to sift the material from the immaterial, we might as well examine the facts through a kaleidoscope.”
Lauritzen,
835 F.2d at 1539 (Easterbrook J., concurring) (“[A]ny balancing test begs questions about which aspects of `economic reality' matter, and why.”). Indeed, Congress rejected Treasury's 1947 proposal to use the multifactor balancing test under the SSA, with some senators expressing concern that, “on virtually no state of facts may anyone be certain whether or not he has a tax liability.”
Webb,
397 U.S. at 188 (quoting S. Rep. No. 1255, at 12 (1948)). The same uncertainty often exists under the FLSA. So far, neither the Department nor courts have articulated clear, generally applicable guidance about how the multiple factors, and the countless facts encompassed therein, are to be balanced, creating uncertainty for the regulated community when, as is often the case, the significance of facts is unclear or factors point in opposite directions.

Courts applying the economic reality test often analyze the factors individually and then reach an overall decision about a worker's classification without meaningful explanation of how they balanced the factors to reach the final decision.
See, e.g., Parrish,
917 F.3d at 380 (analyzing each factor separately and then explaining “for the reasons stated
supra,
we reach the same conclusions as did the district court”);
Chao
v.
Mid-Atl. Installation Servs., Inc.,
16 F. App'x 104, 108 (4th Cir. 2001) (same);
Snell,
875 F.2d at 912 (same). This is so even where many facts and factors support both sides of the classification inquiry.
See, e.g., Acosta
v.
Paragon Contractors Corp.,
884 F.3d 1225, 1238 (10th Cir. 2018) (concluding, without explanation as to weighing of the factors, that workers were employees where two factors (control and integral part) favored independent contractor status and four factors (opportunity for profit or loss, investment, skill, and permanence) favored employee status);
Iontchev
v.
AAA Cab. Services,
685 F. App'x 548, 550 (9th Cir. 2017) (concluding, without explanation as to weighing of the factors, that the workers were independent contractors where two factors (control and opportunity for profit or loss) favored independent contractor status; one factor (investment) was neutral; and three factors (skill, permanence, and integral part) favored employee status).

At other times, courts have provided analysis as to the relative weight of the factors in the specific case before them. For example, some courts have noted where factors weigh “strongly” or “weakly.”
See, e.g., Scantland,
721 F.3d at 1313-19 (finding that, assuming factual inferences in favor of the workers, the control, opportunity for profit or loss, permanence, and integral part factors strongly point to employee status, and the investment and skill factors weakly favor independent contractor status);
Superior Care,
840 F.2d at 1059 (finding that opportunity

for profit or loss and integral part factors “both weigh heavily in favor of the . . . conclusion that nurses are employees,” while skill and permanence factors “weigh slightly in favor of independent status, [but] do not tip the balance”). And at least one court recently dispensed with a factor-by-factor analysis and instead focused its analysis on only those facts that determined the outcome in the case.
See Saleem,
854 F.3d at 140 (“draw[ing] upon and discuss[ing] the
Silk
factors where relevant” to the economic reality of the relationship at issue).

While identifying the most relevant factors in a specific case lends more clarity than a siloed analysis of each factor devoid of context, this approach still leaves the regulated community without generally applicable guidance as to what matters most and why.
See Lauritzen,
835 F.2d at 1539 (Easterbrook J., concurring) (“A legal approach calling on judges to examine all of the facts, and balance them, avoids formulating a rule of decision . . . [and] keep[s businesses] in the dark about the legal consequences of their deeds.”). In other words, the multifactor economic reality test is missing direction on the relative importance of the factors.

3. Confusion and Inefficiency Due to Overlapping Factors

The economic reality test's multifactor framework gives some structure to an otherwise roving inquiry by filtering the totality of circumstances into distinct relevant categories. But three factors—skill, permanence, and integral part—have been expanded by courts and the Department to incorporate aspects of economic reality that also fall under the control factor, creating overlapping coverage. There is additional overlap between the opportunity for profit/loss and investment factors, which “relate logically to one [an]other.”
McFeeley,
825 F.3d at 243;
Lauritzen,
835 F.2d at 1537 (“The capital investment factor is . . . interrelated to the profit and loss consideration.”). The structure provided by a multifactor framework breaks down when the lines between factors are blurred.
See Saleem,
854 F.3d at 140 n. 20 (“[C]aution is merited because the
Silk
factors, while helpful in identifying relevant facts, overlap to a substantial degree[.]”). Blurred lines further create inefficiency by requiring courts to analyze the same facts multiple times, sometimes in inconsistent ways. Additionally, litigants address and analyze the same facts repeatedly, and businesses must evaluate those same facts again and again when making worker classification decisions. Each of these overlaps are discussed in more detail below.

Silk
articulated a “skill required” factor as part of the economic reality test, 331 U.S. at 716, and several federal courts of appeals continue to apply this factor to consider “the degree of skill required to perform the work.”
Paragon,
884 F3d at 1235;
see also Iontchev,
685 F. App'x at 550 (asking “whether services rendered . . . require[d] a special skill”);
Keller,
781 F.3d at 807 (analyzing “the degree of skill required”). As explained above, this inquiry has been expanded by some other courts into a “skill and initiative” factor which, in addition to asking whether workers have “some unique skill set,” also analyzes whether they “exercise significant initiative within the business.”
Parrish,
917 F.3d at 385;
see also, e.g., Superior Care,
840 F.2d at 1060. The ability to exercise significant initiative is already analyzed as part of the control factor. This expansion of the skill factor to incorporate the initiative aspect of control occurred because courts recognized that “the use of special skills is not itself indicative of independent contractor status, especially if the workers do not use those skills in any independent way.”
Selker Bros.,
949 F.2d at 1295;
see also Superior Care,
840 F.2d at 1060. The Department now believes this sentiment could have been better incorporated into the analysis by explaining that capacity for initiative under the control factor is more important than having a specialized skill. Such an approach would have also provided helpful guidance regarding how to balance the factors that point in different directions.

Instead, courts and the Department have imported a control analysis into the skill factor.
See Selker Bros.,
949 F.2d at 1295 (concluding that the skill factor weighed towards employee classification due to “the degree of control exercised by [the potential employer] over the day-to-day operations”);
see also
WHD Fact Sheet #13 (describing the skill factor to include “initiative, judgment, or foresight”). For many courts, the analysis of control appears to have become the most important part of the skill factor, overriding presence or absence of actual specialized skill.
See Baker,
137 F.3d at 1443 (finding that the skill factor weighed towards employee classification where skilled welders “are told what to do and when to do it”);
Superior Care,
840 F.2d at 1060 (finding that the skill factor weighed towards employee classification for skilled nurses because “Superior Care in turn controlled the terms and conditions of the employment relationship”). In short, by adding “initiative” to the “skill required” factor originally articulated by
Silk,
courts have turned that factor into an extension of the control factor. The “skill and initiative” factor also overlaps with the opportunity for profit or loss factor, which considers whether a worker's earnings are determined by initiative.
See, e.g., Snell,
875 F.2d at 810 (finding employee status in part because the workers' “earnings did not depend upon their judgment or initiative, but on the [potential employer's] need for their work”). Thus, facts relating to initiative are analyzed through three factors: Control, opportunity for profit, and skill.
14

14
While both the control factor and the opportunity for profit or loss factor overlap with the “skill and initiative” factor, they do not overlap with each other in this regard. The control factor concerns the
capacity
for initiative,
i.e.,
whether a worker is able to exercise initiative. The opportunity for profit concerns the
effect
of initiative,
i.e.,
the extent to which profits (or losses) are determined by the exercise of initiative. The former is a prerequisite for the latter.

Such overlap exacerbates confusion by blurring the lines between the economic reality factors. It also requires redundant analysis of the same facts under different factors, which may yield inconsistent and confusing results within the same case. For example, in
Express Sixty-Minutes Delivery,
the court concluded that the control factor pointed towards independent contractor status in part because the delivery drivers had substantial capacity for initiative: “Drivers set their own hours and days of work[,] can reject deliveries without retaliation,” and “can work for other courier delivery systems.” 161 F.3d at 303. The court further determined that each “driver's profit or loss is determined largely on his or her skill, initiative, ability to cut costs, and understanding of the courier business.”
Id.
at 304. But confusingly, the court also held that the “skill and initiative factor points towards employee status” due to “the key missing ingredient . . . [of] initiative.”
Id
at 305. Read together, these holdings may be confusing because the court held that drivers lacked the very initiative that the court recognized in the same opinion to determine their profits and losses. It may also appear inconsistent for the court to hold that initiative was a “missing ingredient” when it determined in the same opinion that drivers had freedom to set hours, reject assignments, and work for competitors.

Next, the permanence factor originally concerned the continuity and duration of a working relationship. The factor has since been expanded by many courts and the Department to also consider the exclusivity of the relationship.

See, e.g.,

Parrish,

917 F.3d at 386-87 (considering as part of the permanence factor whether any worker worked exclusively for the potential employer);
Keller,
781 F.3d at 807-09 (considering the exclusivity of the working relationship as part of the permanence factor);
Scantland,
721 F.3d at 1319 (finding installation technicians' relationships with the potential employer were permanent because they “could not work for other companies”);
see also
WHD Opinion Letter FLSA2019-6 at 8. But exclusivity is already an aspect of control.
See, e.g., Saleem,
854 F.3d at 141 (“[A] company relinquishes control over its workers when it permits them to work for its competitors.”);
Express Sixty-Minutes Delivery,
161 F.3d at 303 (concluding that the control factor indicated independent contractor status in part because the workers “can work for other courier delivery systems, and [their agreement] does not contain a covenant-not-to-compete”). This overlap results in exclusivity being analyzed twice in many cases,
15

once as part of the control factor and again as part of the permanence factor. As with initiative, such repetitive analysis is inefficient and may exacerbate confusion.

15

Compare, e.g., Freund,
185 F. App'x at 783 (“Hi-Tech exerted very little control over Mr. Freund [in part because] Freund was free to perform installations for other companies.”),
with id.
at 784 (“Freund's relationship with Hi-Tech was not one with a significant degree of permanence . . . [because] Freund was able to take jobs from other installation brokers.”).

Third, the integral part factor used by some courts to analyze importance appears to be a proxy for control.
16

Courts appear to assume that businesses will use employees and not independent contractors to perform important work in order to control how and when that work is performed. For example, one court explained the use of this factor by stating “it is presumed that, with respect to vital or integral parts of the business, the employer will prefer to engage an employee rather than an independent contractor. This is so because the employer retains control over the employee and can compel attendan[ce] at work on a consistent basis.”
Baker
v.
Dataphase, Inc.,
781 F. Supp. 724, 735 (D. Utah 1992);
see also Baker
v.
Barnard Const. Co. Inc.,
860 F. Supp. 766, 777 (D.N.M. 1994),
aff'd sub nom. Baker
v.
Flint Eng'g & Const. Co.,
137 F.3d 1436 (10th Cir. 1998) (same). As an initial matter, this observation appears to rest on a mistaken premise. Manufacturers, for example, commonly have critical parts and components produced and delivered by wholly separate companies. In any event, the control factor already directly analyzes whether a business can compel a worker to work on a consistent basis or otherwise closely supervise and manage performance of the work.
See, e.g., Nieman
v.
Nat'l Claims Adjusters, Inc.,
775 F. App'x 622, 625 (11th Cir. 2019) (“The first factor—control—weighs in favor of independent contractor status because Nieman . . . controlled his schedule.”). Such analysis presumes a relationship between control and integral part, and therefore is redundant.
17

16
As discussed above, the Supreme Court's
Rutherford
opinion did not analyze whether work was important but rather whether it was “part of an integrated unit.” 331 U.S. at 729. Notably, the Fifth Circuit does not typically consider the integral part factor.

17
Moreover, some courts have further conflated the integrality analysis by assuming that easily “replaceable” workers are less integral to a business.
Browning
v.
Ceva Freight, LLC,
885 F. Supp. 2d 590, 610 (E.D.N.Y. 2012);
see also Velu
v.
Velocity Exp., Inc.,
666 F. Supp. 2d 300, 307 (E.D.N.Y. 2009) (observing that integrality to business diminished where “work is interchangeable with the work of other[s]”). That may be true, but being easily replaceable or interchangeable makes workers more economically dependent on that business for work, not less. Thus, focusing on integrality can sometimes obscure the ultimate issue of economic dependence.

Finally, while
Silk
articulated opportunity for profit or loss and investment as separate factors, 331 U.S. at 716, there is clear overlap because “[e]conomic investment, by definition, creates the opportunity for loss, [and] investors take such a risk with an eye to profit.”
Saleem,
854 F.3d at 145 n.29. Indeed, the Supreme Court analyzed these two factors together in
Silk,
concluding that coal unloaders were employees because they had “no opportunity to gain or lose except from the work of their hands and [ ] simple tools.” 331 U.S. at 717-18. In contrast, truck drivers in that case were independent contractors in part because they invested in their own trucks and had an “opportunity for profit from sound management” of that investment.
Id.
at 319.

There often is redundancy where the opportunity for profit or loss and investment factors are considered separately.
See, e.g., Mid-Atlantic Installation Servs.,
16 F. App'x at 106-07. And separate analyses may result in confusion to the extent that it encourages analysis of a worker's investment outside of the context of the worker's opportunity for profit or loss. As discussed above, some courts compare the dollar value of a worker's personal investment against the total investment of large companies that, for example, “maintain[ ] corporate offices,”
Hopkins,
545 F.3d at 344;
see also Parrish,
917 F.3d at 383;
Keller,
781 F.3d at 810, which says nothing about whether the worker is in business for him- or herself, as opposed to being economically dependent on the potential employer for work. Such irrelevant and potentially misleading comparisons could be avoided if investment were analyzed together with the opportunity for profit or loss factor, as the Supreme Court did in
Silk,
331 U.S. at 719. That is precisely what the Second Circuit has done by combining opportunity for profit or loss and investment in a single factor.
See Superior Care,
840 F.2d at 1058.

In summary, significant overlaps between factors exacerbate confusion about how certain facts are analyzed and balanced. They also create inefficiency by requiring redundant review of the same facts by courts, redundant litigation over the same facts by parties, and redundant analysis of the same facts by business seeking to classify workers.

4. The Shortcomings and Misconceptions That This Proposal Seeks To Remedy Are More Apparent in the Modern Economy

Certain shortcomings of the economic reality test have become more apparent in the modern economy. In particular, technological and social change—such as falling transaction costs, the transition from more of an industrial economy to more of a knowledge economy, and shorter job tenures—have revealed how analyzing the integral part factor through the lens of importance rather than integration, and giving undue weight to the investment and permanence factors, may send misleading signals regarding an individual's classification.

First, falling transaction costs in many sectors of the economy highlight the potential for errors resulting from analyzing the integral part factor through the lens of importance instead of integration. When the transaction costs of hiring are high, firms tend to hire employees rather than independent contractors for core tasks that must be performed on a routine basis.
18

Thus, analyzing the importance, centrality, or frequency of the work to an organization's business may have been correlated with a worker's classification,

even though such analysis departs from
Rutherford Food'
s consideration of whether work is part of an “integrated unit of production.” 331 U.S. at 726. Over the past several decades, however, technological innovations have driven transactions costs down in many (but not all) sectors of the economy, sometimes to negligible levels.
19

Firms in those sectors can now often hire independent contractors rather than employees for core tasks without incurring onerous transaction costs. For example, drivers are vital to the personal transportation business, but transportation companies increasingly hire independent contractor drivers rather than employees.
See, e.g., Saleem,
854 F.3d at 140;
Iontchev,
685 F. App'x at 550. The Department thus believes analyzing the importance or centrality of work may send misleading signals in low-transaction-cost environments that have become more commonplace, which militates in favor of refocusing the integral part factor on integration rather than importance.
20

18
Ronald Coase,
Nature of the Firm,
4 Economica 386 (1937),
https://onlinelibrary.wiley.com/doi/epdf/10.1111/j.1468-0335.1937.tb00002.x. See also
Nobel Prizes and Laureates, Oct., 15, 1991,
https://www.nobelprize.org/prizes/economic-sciences/1991/press-release/
(explaining
The Nature of the Firm's
contribution to economics literature as a central reason for Coase's receipt of the 1991 Nobel Prize in Economics).

19

See, e.g.,
Anders Henten and Iwona Windekie, “Transaction Costs and the Sharing Economy,”
26th European Regional ITS Conference
p. 2 (2015) (asserting that “digital platforms allow for decreasing transaction costs”),
https://www.econstor.eu/bitstream/10419/127145/1/Henten-Winderkilde.pdf.

20
As noted in the Background section and explained in further detail below, the Supreme Court did not analyze whether work was important, but rather whether work was “part of an integrated unit of production.”
Rutherford Food,
331 U.S. at 726. The Department proposes to return to the Supreme Court's original factors.

Second, the transition from a more industrial economy to more of a knowledge-based economy has diminished the investment factor's ability to indicate economic dependence.
21

Broadly speaking, the factors of production in a more industrial economy consist of either physical capital that produced investment returns or labor for which wages were paid. Such a more industrial economy facilitated a relatively clear distinction between “wage earners toiling for a living” and “independent entrepreneurs seeking a return on their risky capital investments.”
Mr. W Fireworks,
814 F.2d at 1051. In today's more knowledge-based economy, however, it is often human rather than physical capital that matters most. Because personal initiative and know-how can enable entrepreneurship in a more knowledge-based economy, workers who lack “capital investments” cannot be assumed to be “wage earners toiling for a living.”
See, e g., Lauritzen,
835 F.2d at 1540-41 (Easterbrook, J. concurring) (observing that an attorney “sells human capital rather than physical capital, but this does not imply that lawyers are `employees' of their clients under the FLSA”);
Meyer
v.
U.S. Tennis Ass'n,
607 F. App'x 121, 123 (2d Cir. 2015) (holding that tennis umpires were independent contractors even though they “invest little”). So, while the presence of significant capital investment is still probative, its absence may be less so in more knowledge-based occupations and industries. Indeed, technological advances enable, for example, freelance journalists, graphic designers, or consultants to be entrepreneurs with little more than a personal computer and smartphone.
See, e.g., Faludi
v.
U.S. Shale Sols., L.L.C.,
950 F.3d 269, 276 (5th Cir. 2020) (holding that a consultant who “provided his own phone and computer” and “made investments in his continuing education and home office equipment” was an independent contractor).

21

See, e.g.,
Walter Powell and Kaisa Snellman,
The Knowledge Economy,
30 Annu. Rev. Sociol. 199-220 (2004).

Finally, shorter job tenures among American workers have diminished the underlying rationale of the permanence factor.
22

That factor assumes that independent contractors have relatively short working relationships while employees have longer ones.
23

Such distinction was sharp when the vast majority of employees had job tenures that lasted many years or even decades, as may have been the case for employees born in the 1940s and earlier.
24

But the Atlanta Federal Reserve's 2015 analysis of BLS data for U.S. workers born between 1933 and 1993 found that median job tenure has declined steadily for every age cohort, with younger generations having the lowest job tenures.
25

The most recently available data from the Department's Bureau of Labor Statistics (BLS) shows that, since 2014, job tenure rates have resumed their long-term decline, following a brief increase attributable to the 2008 recession, with the lowest job tenure rates for younger workers. The lowest median tenure (2.2 years) was found in the leisure and hospitality industry, which tends to have younger workers on average. This means that many employees today have shorter working relationships with their employers, which dulls the usefulness of job duration to distinguish an employee from an independent contractor.

22
The Department has not investigated the cause of shorter job tenures since 1947 as part of this rulemaking.

23

Compare, e.g.,

Bartels,
332 U.S. at 127 (finding that band members were independent contractors in part because “[a]lmost all of the engagements . . . involved were one-night stands”),
with Whitaker House,
366 U.S. at 29 (finding that homeworkers were employees of a cooperative that “required [the homeworkers] to remain members at least a year”).

24
Julie Hotchkiss and Christopher Macpherson,
Falling Job Tenure: It's Not Just about Millennials,
Federal Reserve Bank of Atlanta, June 8, 2015,
https://www.frbatlanta.org/blogs/macroblog/2015/06/08/falling-job-tenure-its-not-just-about-millennials.aspx.

25

Id.

In summary, the Department believes the current multifactor economic reality test suffers because the analytical lens through which all the factors are to be filtered remains inconsistent; there is no clear principle regarding how to balance the multiple factors; the lines between many of the factors are blurred; and these shortcomings have become more apparent in the modern economy. The result is legal uncertainty that obscures workers' and businesses' respective rights and obligations under the FLSA. Such uncertainty is especially acute when it comes to the growing number of more flexible and nimble work relationships. While such relationships benefit workers and businesses alike, they also lead to complex questions about a worker's classification under the FLSA, which are difficult to answer due in part to the shortcomings described above.
26

26

See, e.g.,
Kati L. Griffith,
The Fair Labor Standards Act at 80: Everything Old Is New Again,
104 Cornell L. Rev. 557, 561 (2019) (“[N]ew trends raise complicated questions about who is a true independent contractor excluded from the [FLSA]'s protections. Most notably, the recent growth in workers who depend on freelance or `contract work,' has received a lot of attention.”); Griffin Toronjo Pivateau,
The Prism of Entrepreneurship: Creating A New Lens for Worker Classification,
70 Baylor L. Rev. 595, 625 (2018) (“The economic realities test fails to cope with innovative working arrangements.”); Keith Cunningham-Parmeter,
From Amazon to Uber: Defining Employment in the Modern Economy,
96 B.U. L. Rev. 1673, 1683-84, 1688 (2016) (“[P]ersistent uncertainty impacts an ever-expanding list of businesses in retail, service, home care, construction, information technology, and the burgeoning on-demand economy.”).

The Department is further concerned that continued legal uncertainty may deter innovative work arrangements by creating legal risks with respect to misclassifying workers as independent contractors instead of employees. Take, for example, the workers in WHD's April 2019 opinion letter who searched for job opportunities and negotiated for prices by “ `multi-app[ing]'—that is simultaneously run[ing a company]'s virtual platform alongside the platform of a competitor to compare virtual opportunities in real time and pick the best opportunity on a job-by-job basis.” WHD Opinion Letter FLSA2019-6 at 8. Multi-apping creates significant economic value by letting workers find the best paying opportunities, providing app companies with access to a larger workforce, and helping consumers

benefit from competition. This innovative practice depends on being able to confidently classify workers as independent contractors.
27

For this reason, a clear standard for employee classification can help encourage multi-apping and other economic innovations. Under the status quo, a company may believe it cannot be sure of a classification outside of costly litigation applying the economic reality test (which may be too unwieldly as currently applied). The prospect of such litigation expense and any potential back wages and penalties may be enough to deter businesses from exploring innovative business models and working relationships. Thus, legal uncertainty regarding worker classification may inhibit the development of new job opportunities or result in the elimination of existing jobs.

27
Businesses have a strong incentive to restrict multi-apping to independent contractors because an employee who multi-apps may create complicated questions regarding which of the multiple app companies is responsible for FLSA obligations for time spent multi-apping. During the multi-app period, a worker would be searching for customers on behalf of multiple app companies, and it therefore may be difficult or impractical to determine the company or companies for which the worker is performing compensable work if he or she is a non-exempt employee. This could raise challenging questions that create legal risk for each employer. The Department believes that the greater the legal certainty of workers' respective classifications, the more the Department encourages innovative work arrangements like multi-apping by providing companies with clear frameworks to set up these arrangements.

The Department is therefore issuing this NPRM to provide greater legal certainty and solicits comments on all these issues.

IV. Proposed Regulatory Provisions

In light of the foregoing concerns, the Department is proposing to introduce a new part to Title 29 of the Code of Federal Regulations addressing whether particular workers are “employees” or independent contractors under the FLSA. In relevant part, and as discussed in greater detail below, the Department proposes:

• Introductory provisions at § 795.100 explaining the purpose and legal authority for the new part;

• a provision at § 795.105(a) explaining that independent contractors are not employees under the FLSA;

• a provision at § 795.105(b) discussing the “economic reality” test for distinguishing FLSA employees from independent contractors, clarifying that the concept of economic dependence turns on whether a worker is in business for him- or herself (independent contractor) or is economically dependent on a potential employer for work (employee);

• provisions at § 795.105(c) and (d) describing factors examined as part of the economic reality test, including two “core” factors—the nature and degree of the worker's control over the work and the worker's opportunity for profit or loss—which are afforded greater weight in the analysis, as well as three other factors that may serve as additional guideposts in the analysis;

• a provision at § 795.110 advising that the parties' actual practice is more relevant than what may be contractually or theoretically possible; and

• a severability provision at § 795.115.

These proposals would significantly clarify how the Department distinguishes between employees and independent contractors under the Act.

The Department welcomes comment on all aspects of its proposal.

The Department further proposes to adopt the above-described provisions as its sole and authoritative interpretation of independent contractor status under the FLSA. Accordingly, the Department would replace industry-specific interpretations of independent contractor status for sharecroppers or tenants at § 780.330(b) and certain forestry or logging operations at § 788.16(a) with cross-references to the interpretation set forth in this rule. These previous industry-specific interpretations of independent contractor status all rely on the same FLSA terms as the interpretation set forth in this propose rule.
28

As such, the Department believes the justifications articulated in the need for rulemaking discussion in Section III, particularly the need for a consistent and clear standard for determining independent contractor status in all FLSA cases, largely apply to the question of independent contractor status in those industries.

28
The interpretation of independent contractor status under § 780.330(b) for sharecroppers or tenants pertain to an exemption for certain “employee[s] employed in agriculture” under section 13(a)(6) of the FLSA. The Department believes the distinction this proposed rule draws between independent contractors and employees would apply in the agricultural exemption context because the same statutory terms,
i.e.,
employee and employ, are being interpreted.

The Department considered, but is not proposing at this time, similar revisions to 29 CFR 500.20(h)(4), which addresses independent contractor status under MSPA. The Department recognizes that MSPA adopts by reference the FLSA's definition of “employ,”
see
18 U.S.C. 1802(5), and that 29 CFR 500.20(h)(4) considers “whether or not an independent contractor or employment relationship exists under the Fair Labor Standards Act” to interpret independent contractor status under MSPA. Nonetheless, MSPA imposes different legal obligations than the FLSA's minimum wage and overtime pay obligations and applies to different employers and employees.
29

And the Department's enforcement experience does not indicate that there is confusion regarding workers' classifications as an employee or independent contractor in the MSPA context to the same extent as the FLSA context. As such, it is not entirely clear whether the justifications articulated in the need for rulemaking discussion in Section III apply in the MSPA context. The Department therefore proposes to proceed incrementally by first seeking comment on a revised interpretation of independent contractor status under the FLSA before considering whether to revise the MSPA regulations.
30

The Department welcomes comments regarding whether 29 CFR 500.20(h)(4) should be revised to be consistent with the interpretation of independent contractor status set forth in this proposed rule.

29

See
WHD Fact Sheet #49, “The Migrant and Seasonal Agricultural Worker Protection Act” (Jul. 2008).

30

See, e.g., Pharm. Research & Mfrs. of Am.
v.
FTC.,
790 F.3d 198, 203 (D.C. Cir. 2015) (affirming that agency had discretion to “proceeding incrementally” in promulgating rules that were directed to one industry but not others);
Inv. Co. Inst.
v.
Commodity Futures Trading Comm'n,
720 F.3d 370, 378 (D.C. Cir. 2013) (observing that “[n]othing prohibits federal agencies from moving in an incremental manner” (quoting
F.C.C.
v.
Fox Television Stations, Inc.,
556 U.S. 502, 522 (2009));
City of Las Vegas
v.
Lujan,
891 F.2d 927, 935 (D.C. Cir. 1989) (noting that “agencies have great discretion to treat a problem partially”).

A. Introductory Statements

Proposed § 795.100 explains that the interpretations provided in part 795 will guide WHD's enforcement of the FLSA and are intended to be used by employers, businesses, the public sector, employees, workers, and courts to assess employment status classifications under the Act. Proposed § 795.100 further clarifies that, if proposed part 795 is adopted, employers may safely rely upon the interpretations provided in part 795 under section 10 of the Portal-to-Portal Act, unless and until any such interpretation “is modified or rescinded or is determined by judicial authority to be invalid or of no legal effect.” 29 U.S.C. 259.

B. Proposal To Explain That Independent Contractors Are Not Employees Under the Act

Proposed § 795.105(a) explains that an independent contractor who renders services to a person is not an employee of that person under the FLSA. This is consistent with the Supreme Court's affirmation in
Rutherford Food
that the Act's definition of employee has consistently been interpreted as excluding individuals who “might work for their own advantage,” including “independent contractors who take part in production or distribution.” 331 U.S. at 728-29;
see also, e.g.,

Hopkins,
545 F.3d at 342;
Saleem,
854 F.3d at 139-40;
Karlson,
860 F.3d at 1092. Minimum wage and overtime pay requirements under sections 6 and 7 of the Act apply only to a person's
employees. See
29 U.S.C. 206(a), 207(a)(1). As such, those requirements do not apply with respect to a person's independent contractors. For the same reason, the recordkeeping obligations for employers under section 11 of the Act do not apply to a person with respect to services received from an independent contractor.
See
29 U.S.C. 211(c) (“Every employer subject to any provision of [the FLSA] shall make, keep, and preserve such records of the persons
employed
by him[.]”) (emphasis added).

C. Proposal To Adopt the Economic Reality Test To Determine a Worker's Employee or Independent Contractor Status Under the Act

Proposed § 795.105(b) adopts the economic reality test to determine a worker's status as an employee or an independent contractor under the Act.

The Department's analysis begins with the text of the statute, following well-settled principles of statutory construction by “reading the whole statutory text, considering the purpose and context of the statute, and consulting any precedents or authorities that inform the analysis.”
Kasten
v.
Saint-Gobain Performance Plastics Corp.,
563 U.S. 1, 7 (2011) (interpreting the FLSA) (internal quotation marks and citation omitted). An employer employs an individual under the Act if the employer “suffer[s] or permit[s]” the individual to work. 29 U.S.C. 203(g). Proposed § 795.105(b) codifies the Supreme Court's statement that “suffer or permit” means something broader than the common law conception of control; namely, economic dependence.
See, e.g., Darden,
503 U.S. at 326. Therefore, the Department proposes that the central inquiry as to whether an individual is an employee or independent contractor under the Act is whether, as a matter of economic reality, the individual is economically dependent on the potential employer for work.
See Pilgrim Equip.,
527 F.2d at 1311 (“It is dependence that indicates employee status.”).

However, all workers—employees and independent contractors alike—are economically dependent on others to some degree. Business owners are likewise economically dependent on the workers they hire, but this does not make them employees of their own workers. The economic reality test can be “ `a dimensionless and amorphous abstraction' ” unless its touchstone—economic dependence—is clarified.
Webb,
397 U.S. at 188 (quoting S. Rep. No. 1255, at 12 (1948)). As explained in the need for rulemaking discussion earlier in Section III, the meaning of economic dependence is sometimes inconsistently applied and would benefit from further explanation.

Clarifying the test requires putting the question of economic dependence in the proper context. “Economic dependence is not conditioned reliance on an alleged employer for one's primary source of income, for the necessities of life.”
Mr. W Fireworks,
814 F.2d at 1054. Rather, courts have framed the question as “whether, as a matter of economic reality, the workers depend upon someone else's business for the opportunity to render service or are in business for themselves.”
Saleem,
854 F.3d at 139;
see also Parrish,
917 F.3d at 379;
Baker,
137 F.3d at 1440 (“[T]he focal point is whether the individual is economically dependent on the business to which he renders service . . . or is, as a matter of economic fact, in business for himself.”) (internal quotation marks and citation omitted);
Donovan
v.
Tehco, Inc.,
642 F.2d 141, 143 (5th Cir. 1981) (“The focal inquiry in the characterization process is thus whether the individual is or is not, as a matter of economic fact, in business for himself.”). In other words, the key question is whether workers are “more closely akin to wage earners,” who depend on others to provide work opportunities, or “entrepreneurs,” who create work opportunities for themselves.
Mr. W Fireworks,
814 F.2d at 1051;
see also Express Sixty-Minutes,
161 F.3d at 305 (asking whether workers “are more like wage earners than independent entrepreneurs”);
cf.
H.R. Rep. No. 245, 80th Cong., 1st Sess. 18 (1947) (“ `Employees' work for wages or salaries under direct supervision. `Independent contractors' undertake to do a job for a price, decide how the work will be done, usually hire others to do the work, and depend for their income not upon wages, but upon the difference between what they pay for goods, materials, and labor and what they receive for the end result, that is, upon profits.”).

The above-described concept of economic dependence comports with the FLSA's definition of employ as “includ[ing] to suffer or permit to work.”
See
29 U.S.C. 203(g). An individual who depends on a potential employer for work is able to work only by the sufferance or permission of the potential employer. Such an individual is therefore an employee under the Act. In contrast, an independent contractor does not work at the sufferance or permission of others because, as a matter of economic reality, he or she is in business for him- or herself. In other words, an independent contractor is an entrepreneur who works for him- or herself, as opposed to an employer.

Some courts have relied on a worker's entrepreneurship with respect to one type of work to conclude that the worker was also in business for him- or herself in a second, unrelated type of work.
See, e.g., Parrish,
917 F.3d at 384 (considering “plaintiff's enterprise, such as the goat farm, as part of the overall analysis of how dependent plaintiffs were on [defendant]” for working as consultants);
Thibault,
612 F.3d at 849 (concluding that plaintiff was an independent contractor as a cable splicer in part because he managed unrelated commercial operations and properties in a different state). However, the Supreme Court was clear that the economic reality analysis is limited to “the claimed independent operation.”
Silk,
331 U.S. at 716. Thus, the relevant question in this context is whether the worker providing certain service to a potential employer is an entrepreneur “in that line of business.”
Mr. W Fireworks,
814 F.2d at 1054. Otherwise, businesses must make worker classification decisions based on facts outside the working relationship, such as whether a consultant manages a “goat farm,”
Parrish
917 F.3d at 384, or whether a cable splicer owns an out-of-state commercial venture.
Thibault,
612 F.3d at 849.
31

31
It is possible for a worker to be an employee in one line of business and an independent contractor in another.

At bottom, the phrase “economic dependence” may mean many different things. But in the context of the economic reality test, “economic dependence” is best understood in terms of what it is not. The phrase excludes individuals who, as a matter of economic reality, are in business for themselves. Such individuals work for themselves rather than at the sufferance

or permission of a potential employer,
see
29 U.S.C. 203(g), and thus are not dependent on that potential employer for work. Proposed § 795.105(b) therefore recognizes the principle that, as a matter of economic reality, workers who are in business for themselves with respect to work being performed are independent contractors for that type of work.

D. Proposal To Apply the Economic Reality Factors To Determine a Worker's Independent Contractor or Employee Status

The uncertainty and unpredictability of the traditional multifactor analysis of economic dependence has led some courts and commentators to call for alternative approaches. Judge Easterbrook's concurrence in
Lauritzen,
for instance, urged the Seventh Circuit to “abandon these unfocused `factors' and start again.” 835 F.2d at 1543 (Easterbrook J., concurring). One commentator in a recent article has proposed replacing the economic reality factors with “three main dimensions to entrepreneurship.”
32

The Department, however, prefers to sharpen the existing test, rather than to create a new test out of whole cloth, in part because many existing work relationships are structured around the current multifactor test and wholesale abandonment of that test may impose undue and prohibitive adjustment costs on the regulated community. Moreover, the economic reality test, properly construed and applied, is effective at distinguishing employees from independent contractors. As such, proposed § 795.105(c) and (d) would adopt a variation on the traditional multifactor analysis of economic dependence to improve certainty and predictability, as well as increase the test's probative value into the underlying question of economic dependence.

32
Pivateau,
supra
note 26, at 631. The proposal would replace the six-factor approach with “the three main dimensions to entrepreneurship,” which are: “(1) the processes and events that make up entrepreneurship; (2) the skills and traits that characterize an entrepreneur; and (3) the results that entrepreneurship generates.”
Id.

Proposed § 795.105(c) explains that certain nonexclusive economic reality factors guide the determination of whether an individual is, on one hand, economically dependent on a potential employer and therefore an employee or, on the other, in business for him- or herself and therefore an independent contractor. These factors are listed in § 795.105(d) and are based on economic reality factors currently used by the Department and most federal courts of appeals, with certain proposed clarifications.

First, the Department proposes to follow the Second Circuit's approach of analyzing the worker's investment as part of the opportunity for profit or loss factor. The combined factor would ask whether the worker has an opportunity to earn profits or incur losses based on his or her exercise of initiative or management of investments. Second, the Department proposes to clarify that the “skill required” factor originally articulated by the Supreme Court should be used, as opposed to the “skill and initiative” factor currently used in some circuits, because considering initiative as part of the skill factor creates unnecessary and confusing overlaps with the control and opportunity for profit or loss factors. Third, the Department proposes to further reduce overlap by analyzing the exclusivity of the relationship as a part of the control factor only, as opposed to both the control and permanence factors. Lastly, the Department proposes to reframe the “whether the service rendered is an integral part of the alleged employer's business” factor in accordance with the Supreme Court's original inquiry of whether the work is “part of an integrated unit of production.”
See Rutherford,
331 U.S. at 729.

Proposed § 795.105(c) further improves the certainty and predictability of the test by focusing it on two core factors: (1) The nature and degree of the worker's control over the work; and (2) the worker's opportunity for profit or loss. These core factors, listed in proposed § 795.105(d)(1), are highly probative to the inquiry because the ability to control one's work and to earn profits and risk losses strikes at the core of what it means to be an entrepreneurial independent contractor, as opposed to a “wage earner” employee.
Mr. W Fireworks,
814 F.2d at 1051;
cf. FedEx Home Delivery
v.
NLRB,
563 F.3d 492, 497 (D.C. Cir. 2009) (“[I]ndependent contractors have `significant entrepreneurial opportunity for gain or loss[.]' ”). Other factors listed in proposed § 795.105(d)(2) are also probative depending on the circumstances, but should be evaluated in the context of these two core factors. Given their greater weight, if both proposed core factors point towards the same classification—whether employee or independent contractor—there is a substantial likelihood that the individual's classification is accurate. This is because it is highly unlikely for the other, less probative factors to outweigh the combined weight of the core factors.
33

33
As discussed in greater detail below, the Department's review of federal appellate decisions indicates that, when the two proposed core factors are in alignment, they point to what the court finds to be the individual's correct classification.

The following discussion addresses the five economic reality factors, including proposed modifications and clarifications made to each, and explains why the two core factors are entitled to greater weight than other factors.

1. The Nature and Degree of the Individual's Control Over the Work

The first economic reality factor (proposed § 795.105(d)(1)(i)) is “the nature and degree of the individual's control over the work.”
34

This factor would weigh towards the individual being an independent contractor to the extent that the individual, as opposed to the potential employer, exercises substantial control over key aspects of the performance of the work. Examples in the proposed regulatory text of an individual's substantial control include setting his or her own work schedule, choosing assignments, working with little or no supervision, and being able to work for others, including a potential employer's competitors.
35

In addition, the Department agrees with courts that have found that an individual worker's “substantial control of the key aspects” of the work weighs in favor of independent contractor classification “even if the worker is not solely in control of the work.”
Parrish,
917 F.3d at 381-82;
see also Mid-Atl. Installation Servs.,
16 F. App'x at 106 (affirming the

district court's conclusion that, although the potential employer exercised some control over the work, the manner in which the workers completed their work was “left to their broad discretion and business judgment, which suggests that they are independent contractors”).

34
Many courts articulate this factor as the degree of control over the work by the potential employer as opposed to by the worker.
See, e.g., Razak,
951 F.3d at 142;
Hobbs,
946 F.3d at 829;
McFeeley,
825 F.3d at 241;
Keller,
781 F.3d at 807;
Scantland,
721 F.3d at 1312. This distinction, however, is of no consequence. As the proposed regulatory text and this accompanying discussion make clear, the nature and degree of control over the work by the worker and by the potential employer are considered to determine whether control indicates employee or independent contractor status.

35

See, e.g., Saleem,
854 F.3d at 147 (noting that the workers' “flexible work schedules and considerable control over when, where, and in what circumstances to accept a . . . fare” indicated that they were independent contractors);
Parrish,
917 F.3d at 382 (finding control factor favored independent contractor status where workers “did not have to accept a project” and occasionally “turned down projects without negative repercussion”);
Thibault,
612 F.3d at 847 (finding control factor favored independent contractor status where “supervisors would only come by occasionally, and never specified how [the worker] should do the [work]”);
Express Sixty-Minutes Delivery,
161 F.3d at 303 (determining that the potential employer “had minimal control” over the delivery drivers where drivers “set their own hours and days of work,” “can work for other currier delivery systems,” and “can reject deliveries without retaliation”).

In contrast, the control factor would weigh in favor of classification as an employee to the extent that a potential employer, as opposed to the individual, exercises substantial control over key aspects of the work, including through requirements that the individual work exclusively for it during the working relationship or prohibiting the individual from working for others after that relationship ends. According to the proposed regulatory text, a potential employer may exercise substantial control, for example, where it explicitly requires an exclusive working relationship or where it imposes restrictions that effectively prevent an individual from working with others.
Cf. Keller,
781 F.3d at 814 (“[A] reasonable jury could find that the way that [the potential employer] scheduled [the worker's] installation appointments made it impossible for [the worker] to provide installation services for other companies.”);
Baker,
137 F.3d at 1441 (“[T]he hours [the workers] are required to work on a project (ten to fourteen hours a day, six days a week), coupled with driving time between home and often remote work sites each day, make it practically impossible for them to offer services to other employers.”). However, a “non-disclosure agreement does not require exclusive employment.”
Parrish,
917 F.3d at 382;
see also Talbert,
405 F. App'x at 85 (“[T]here is nothing in the confidential agreement that would have precluded . . . working for other[s].”).

Proposed § 795.105(d)(1)(i) clarifies that requiring an individual to comply with specific legal obligations, satisfy health and safety standards, carry insurance, meet contractually agreed-upon deadlines or quality control standards, or satisfy other similar terms that are typical of contractual relationships between businesses (as opposed to employment relationships) does not constitute control that makes the individual more or less likely to be an employee under the Act. These requirements frequently apply to work performed by employees and independent contractors alike; as such, they are not probative as to whether a working relationship is one of employment or independent contracting. The case law supports this approach.
See, e.g.,

Iontchev,
685 F. App'x at 550 (noting that the potential employer's “disciplinary policy primarily enforced the Airport's rules and [the city's] regulations governing the [drivers'] operations and conduct” in finding that the potential employer exercised “relatively little control over the manner in which the [d]rivers performed their work”);
Mid-Atl. Installation Servs.,
16 F. App'x at 106 (rejecting an argument that backcharging the workers “for failing to comply with various local regulations or with technical specifications demonstrates the type of control characteristic of an employment relationship,” and noting that withholding money in such circumstances is common in contractual relationships);
Mr. W Fireworks,
814 F.2d at 1048 (finding that, because a scheduling requirement was imposed by the potential employer and not by state law, it suggested control over the workers).

In addition, this aspect of the Department's proposal is supported by case law regarding FLSA joint employer status. For example, the Second Circuit agreed that control with respect to “contractual warranties of quality and time of delivery has no bearing on the joint employment inquiry” because such control is “perfectly consistent with a typical, legitimate subcontracting relationship.”
Zheng
v.
Liberty Apparel Co. Inc.,
355 F.3d 61, 75 (2d Cir. 2003).
36

36

See also, e.g., Godlewska
v.
HDA,
916 F. Supp. 2d 246, 259 60 (E.D.N.Y. 2013),
aff'd sub nom. Godlewska
v.
Human Dev. Ass'n, Inc.,
561 F. App'x 108 (2d Cir. 2014) (“Quality control and compliance monitoring . . . are qualitatively different from control that stems from the nature of the relationship between the employees and the putative employer.” (quotation marks omitted));
Jacobson
v.
Comcast Corp.,
740 F. Supp. 2d 683, 691-92 (D. Md. 2010) (holding that the potential joint employer's “quality control procedures . . . [were] qualitatively different from the control exercised by employers over employees”);
Thornton
v.
Charter Commc'ns, LLC,
No. 4:12CV479 SNLJ, 2014 WL 4794320, at *16 (E.D. Mo. Sept. 25, 2014) (same).

Moreover, control exercised by a potential joint employer over a contractor's employees to “ensure compliance with various safety and security regulations” has been found to be “qualitatively different” from control that indicates employer status.
Moreau
v.
Air France,
356 F.3d 942, 950-51 (9th Cir. 2003). Accordingly, the Department agrees with the above case law that the types of control listed in the last sentence of proposed § 795.105(d)(1)(i) are “qualitatively different” from control that evinces employer status.
Moreau,
343 F.3d at 1189;
see also Iontchev,
685 F. App'x at 550;
Mid-Atlantic Installation Servs.,
16 F. App'x at 106;
Mr. W Fireworks,
814 F.2d at 1048;
Freund,
185 F. App'x at 783. The Department welcomes comment regarding this approach, including the distinction being drawn between bona fide quality control measures and control that is indicative of an employment relationship.

2. The “Opportunity for Profit or Loss” Factor

The second economic reality factor (proposed § 795.105(d)(1)(ii)) is “the individual's opportunity for profit or loss.” In analyzing this factor, courts generally consider whether such opportunities are based on personal initiative, managerial skill, or business acumen.
37

The Second Circuit also considers the individual's opportunity for profit or loss based on investments.
See Superior Care,
840 F.2d at 1060. The Department and courts of appeals outside of the Second Circuit have traditionally analyzed “opportunity for profit or loss” and “investment” as separate factors, but at least some of those courts recognize that the two are “interrelated.”
Lauritzen,
835 F.2d at 1537;
see also McFeeley,
825 F.3d at 243. The Department believes the Second Circuit's approach of combining the factors is preferable because it minimizes duplicative analysis of the same facts under different factors and aligns more closely with the Supreme Court's original analysis in
Silk,
331 U.S. at 717-19.

37

See, e.g., Karlson,
860 F.3d at 1094-95 (discussing how the worker's decisions and choices regarding assignments and customers affected his profits);
Saleem,
854 F.3d at 145 (noting in support of independent contractor status that the degree to which the worker's relationship with the potential employer “yielded returns was a function . . . of the business acumen of each [worker]”);
McFeeley,
825 F.3d at 243 (“The more the worker's earnings depend on his own managerial capacity rather than the company's . . . the less the worker is economically dependent on the business and the more he is in business for himself and hence an independent contractor.”) (internal quotation marks omitted);
Express Sixty-Minutes,
161 F.3d at 304 (agreeing with district court that “driver's profit or loss is determined largely on his or her skill, initiative, ability to cut costs, and understanding of the courier business.”); WHD Opinion Letter FLSA2019-6 at 6 (“These opportunities typically exist where the worker receives additional compensation based, not [merely] on greater efficiency, but on the exercise of initiative, judgment, or foresight.”).

As explained in the need for rulemaking discussion in Section III, treating “opportunity for profit or loss” and “investment” as separate factors results in duplicative analysis of the same facts. For example, in
Mid-Atlantic Installation Services,
the Fourth Circuit found that the opportunity for profit or loss factor weighed in favor of independent contractor status because the cable installer's “net profit or loss depends on [in part] . . . the business acumen with which the Installer makes

his required capital investments in tools, equipment, and a truck.” 16 F. App'x at 106. The court further held that the investment factor also pointed in that direction based on those same facts,
i.e.,
the installers “suppl[ied] their own trucks (equipped with 28-foot ladders), specialized tools, uniforms, and pagers.”
Id.
at 107. Such duplicative analysis is unwieldly, and it can be potentially confusing where the two factors analyzing the same facts reach opposite conclusions regarding a worker's classification.
See, e.g., Parrish,
917 F.3d at 382-85;
Cromwell,
348 F. App'x at 61.

The Second Circuit avoids duplication and potential confusion by analyzing investment and opportunity for profit or loss together. Under this approach, the worker's meaningful capital investments may evince opportunity for profit or loss: “[e]conomic investment, by definition, creates the opportunity for loss, [and] investors take such a risk with an eye to profit.”
Saleem,
854 F.3d at 145 n.29. But investment is not the only way to satisfy this factor because workers who “invest little” may nonetheless have an opportunity for profit through the exercise of personal initiative.
Meyer,
607 F. App'x at 121;
accord Parrish,
917 F.3d at 384-85;
Express Sixty-Minutes,
161 F.3d at 304. In short, meaningful investment is a sufficient but not necessary dimension of the opportunity for profit or loss.
See Lauritzen,
835 F.2d at 1540-41 (Easterbrook, J. concurring) (“[P]ossess[ing] little or no physical capital . . . is true of many workers we would call independent contractors. Think of lawyers, many of whom do not even own books. The bar sells human capital rather than physical capital, but this does not imply that lawyers are `employees' of their clients under the FLSA.”);
see also Faludi,
950 F.3d at 275 (“Faludi provided his own phone and computer” and “made investments in his continuing education and home office equipment”).

The Second Circuit's approach of combining opportunity for profit or loss and investment is also more faithful to the Supreme Court's original analysis in
Silk. See
331 U.S. at 716. In that case, the Court listed the two factors separately but analyzed them together. In particular, the Court found that coal unloaders were employees because they had “no opportunity to gain or lose except from the work of their hands and [ ] simple tools,” while truck drivers who invested in their own vehicles had “opportunity for profit from sound management” of that investment by, for instance, hauling for different customers.
Id.
at 719. Thus the question is whether workers are more like unloaders whose profits were based solely on “the work of their hands and [ ] simple tools” or the drivers whose profits depended on their initiative and investments.
See id.; see also Rutherford Food,
331 U.S. at 730 (concluding that workers were employees in part because their opportunity for profit “was more like piecework than an enterprise that actually depended for success upon the initiative, judgment or foresight of the typical independent contractor”).

Not all courts follow the Second Circuit and the Supreme Court's approach of analyzing investment through the lens of profit and loss. Some, for instance, “use[ ] a side-by-side comparison method” that directly “compare[s] `each worker's
individual
investment to that of the alleged employer.' ”
Parrish,
917 F.3d at 383 (quoting
Hopkins,
545 F.3d at 344);
see also, e.g., Keller,
781 F.3d at 810 (agreeing that “courts must compar[e] the worker's investment in the equipment to perform his job with the [potential employer's] total investment”). In
Hopkins,
for example, the Fifth Circuit held that insurance sales leaders' investments were insignificant because “it is clear that [the insurance company's] investment—including maintaining corporate offices, printing brochures and contracts, providing accounting services, and developing and underwriting insurance products—outweighs the personal investment of any one Sales Leader.” 545 F.3d at 344.

But such a “side-by-side comparison method” does not illuminate the ultimate question of economic dependence.
See Karlson,
860 F.3d at 1096 (“[C]omparing the amount Karlson spent . . . with [potential employer's] total expenses in operating APS has little relevance . . . [because] [l]arge corporations can hire independent contractors, and small businesses can hire employees.”). Indeed, it merely highlights the obvious and unhelpful fact that individual workers—whether employees or independent contractors—likely have fewer resources than businesses that, for example, “maintain[ ] corporate offices,”
see Hopkins,
545 F.3d at 344, or drill oil wells,
see Parrish,
917 F.3d at 383 (“Obviously, [the oil drilling company] invested more money at a drill site compared to each plaintiff's investments.”). In contrast, analyzing investment as part of individuals' opportunity for profit or loss illuminates the ultimate inquiry of whether individuals are “more closely akin to wage earners toiling for a living, than to independent entrepreneurs seeking a return on their risky capital investments.”
Mr. W. Fireworks,
814 F.2d at 1051.

The Department is therefore proposing to adopt an approach similar to that of the Second Circuit, which analyzes the worker's investment as part of the opportunity for profit or loss factor. The combined factor would weigh towards the individual being classified as an independent contractor if he or she has an opportunity for profit or loss based on either or both: (1) The exercise of personal initiative, including managerial skill or business acumen; and/or (2) the management of investments in, or capital expenditure on, for example, helpers, equipment, or material. While the effects of the individual's exercise of initiative and management of investment are both considered under this factor, for reasons explained above, the individual would not need to have an opportunity for profit or loss based on both for this factor to weigh towards the individual being an independent contractor. This factor would weigh towards the individual being an employee to the extent the individual is unable to affect his or her earnings through initiative or investment or is only able to do so by working more hours or more efficiently.
38

38
Workers who are paid on a piece-rate basis are an example of workers who are able to affect their earnings only through working more hours or more efficiently. Courts have generally agreed that such workers lack meaningful opportunity for profit or loss.
See, e.g., Whitaker House,
366 U.S. at 33 (plaintiffs who manufactured knitted goods at home were employees under the FLSA, in part, because “[t]he management fixes the piece rates at which they work”);
Hodgson
v.
Cactus Craft of Arizona,
481 F.2d 464, 467 (9th Cir. 1973) (persons who manufacture novelty and souvenir gift items at homes and were compensated at a piece rate were employees under the FLSA). In
DialAmerica,
757 F.2d at 1385, for example, the Third Circuit held that homeworkers who were paid on a piece-rate basis to perform the simple service of researching telephone numbers were employees who lacked meaningful opportunity for profit or loss. In contrast, distributors who recruited and managed researchers and were paid based on the productivity of those they managed were independent contractors, in part, because distributors' earnings depended on “business-like initiative.”
Id.
at 1387.

The Department also considered keeping opportunity for profit or loss and investment as separate factors in its proposal, but believes that approach may be needlessly duplicative and confusing for reasons stated above. If investment were kept as a separate factor, the Department would emphasize that the factor should not reconsider opportunity for profit or loss. Instead, it would focus on whether a worker's investment (or lack thereof) in the equipment, materials, technology, etc. necessary to perform the worker's work

renders the worker more or less economically dependent on the potential employer for work. The Department welcomes comments on this alternative approach.

3. The “Skill Required” Factor

“The amount of skill required for the work” is an economic reality factor under proposed § 795.105(d)(2)(i). The Supreme Court articulated the “skill required” factor in
Silk,
331 U.S. at 716, which several courts of appeals continue to consider as “the degree of skill required to perform the work.”
Paragon,
884 F.3d at 1235;
see also Iontchev,
685 F. App'x at 550;
Keller,
781 F. 3d at 807. The Department and other courts of appeals, however, have traditionally expanded this factor to include consideration of “initiative” and “judgment.”
See, e.g., Parrish,
917 F.3d at 379;
Karlson,
860 F.3d at 1093;
Superior Care,
840 F.2d at 1058-59;
see also
WHD Fact Sheet #13. This expansion was intended to increase the probative value of the skill factor by analyzing therein the worker's capacity to “exercise significant initiative within the business.”
See Parrish,
917 F.3d at 379;
see also Selker Bros.,
949 F.2d at 1295 (“[T]he use of special skills is not itself indicative of independent contractor status, especially if the workers do not use those skills in any independent way.”);
Superior Care,
840 F.2d at 1060 (same). But the worker's capacity to exercise on-the-job initiative is already analyzed in multiple ways under the control factor, including, for example, whether the worker controls the means and manner of work, decides when to work, or choice of assignments.
Express Sixty-Minutes,
161 F.3d at 304. And the effects of a worker's initiative are already analyzed as part of the opportunity for profit or loss factor.
Id.

As explained in the need for rulemaking discussion in Section III, importing aspects of the control factor into the skill factor has diluted the consideration of actual skill to the point of near irrelevance. In many cases, analysis of control rather than skill drives whether the skill factor favors independent contractor or employee status.
See, e.g., Selker Bros.,
949 F.2d at 1295;
Baker,
137 F.3d at 1443;
Superior Care,
840 F.2d at 1060. The Department believes such dilution generates confusion regarding the relevance and weight of the worker's skill in the evaluation of economic dependence. It also blurs the lines between the economic reality factors, thereby undermining the structural benefits of a multifactor test. Furthermore, as at least one court of appeals has found, workers can exercise enough initiative to have a meaningful opportunity for profit or loss but apparently not enough to satisfy the “skill and initiative required” factor.
Express Sixty-Minutes,
161 F.3d at 304-05. This calls into question the relevance of initiative as part of a separate skill factor.

The Department therefore proposes to clarify that this factor should focus on the “amount of skill required,” as originally articulated by the Supreme Court in
Silk,
331 U.S. at 716, and used today by several courts of appeals,
see, e.g., Paragon,
884 F.3d at 1235;
Iontchev,
685 F. App'x at 550;
Keller,
781 F.3d at 807. Notably, this factor would not include a consideration of “initiative” (or the related concepts of judgment and foresight) because facts related to initiative are considered as part of the control and opportunity for profit or loss factors. Proposed § 795.105(d)(2)(i) thus explains that the “skill required” fac

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2020-21018. Public record. Not legal advice.