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Wilson Statement on Employee Classification

March 27, 2007
Press Release

FOR IMMEDIATE RELEASE
March 27, 2007

CONTACT: Kim Olive
(202) 225-2452 (Office)
(202) 420-9493 (Cell)


Wilson Statement on Employee Classification

Congressman Joe Wilson (SC-02), ranking Republican of the House Committee on Education and Labor’s Workforce Protections Subcommittee, today released the following statement after the Subcommittee’s hearing on worker classification:

“Our Subcommittee today heard from concerned employers regarding laws governing worker classifications. Some assert employees are intentionally being misclassified as ’independent contractors’ to circumvent taxes and benefits otherwise paid to full employees.

“Employee misclassification is an injustice to workers and competing employers. Before concluding employers are purposefully thwarting the system, the process by which employee classification is determined should be examined.

“With multiple and contradicting ’tests’ used to establish worker classification, it is probable the system - not employer malice - is to blame. By simplifying the laws regulating classification, fewer instances of misclassification would occur, workers would be better protected, and employers could be confident they are adhering to the law.”


A sample of tests used to determine if a worker is an “employee” or an “independent contractor” includes:


? A ten-factor common law “right to control” test, which is often used by courts to determine employee status in various types of cases, including employment discrimination and benefit cases, tax cases, and tort liability cases;

? A six-factor analysis of the Fair Labor Standards Act (FLSA), in which the U.S. Department of Labor uses an “economic realities test” to determine coverage under, and compliance with, the requirements of the FLSA; and

? An Internal Revenue Service (IRS) test, which focuses on the relationship between the worker and the business. Under the IRS test, all evidence of control and independence in the employer-worker relationship is considered. The facts that provide this evidence fall into three categories: behavioral control, financial control, and the type of relationship itself. The IRS also may use a “Twenty Factor Test” to determine whether an individual is an employee or independent contractor.


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