DOL signals that gig economy workers are not employees

The Labor Department today said that gig workers on a smartphone-based app are not considered employees under federal law, handing a win to businesses seeking to loosen standards on joint employment.

In an opinion letter, DOL said that workers who are connected to jobs via an unnamed app don’t meet the legal definition of an employee under the Fair Labor Standards Act. DOL cited a six-part test to determine the degree to which a worker is economically dependent on an employer.

“Your client provides a referral service,” DOL wrote. “As such, it does not receive services from service providers, but empowers service providers to provide services to end-market consumers. The service providers are not working for your client’s virtual marketplace; they are working for consumers through the virtual marketplace. They do not work directly for your client to the consumer’s benefit; they work directly for the consumer to your client’s benefit.”

DOL this month took steps to roll back an Obama-era guidance on joint employment, proposing a rule that would make it harder to hold businesses jointly liable when their franchisees or contractors violate the the FLSA. The test would weigh whether the business has the power to hire and fire; to supervise schedules and “conditions of employment”; to set pay; and to maintain employment records.