On July 15, 2015, DOL's Wage & Hour Division issued Administrator's Interpretation No. 2015-01, titled, " The Application of the Fair Labor Standards Act's 'Suffer or Permit' Standard in the Identification of Employees Who Are Misclassified as Independent Contractors." Nothing new there, right? All well-counseled employers know that the DOL takes an especially dim view of avoiding overtime by calling workers "independent contractors." DOL's "economic realities" test is tougher than the IRS "common law employee" test. Consequently, you may owe overtime to a worker properly excluded from your W-2 payroll. But, with apologies to Tina Turner, what's the ACA got to do with it? The IRS, not the DOL, enforces the employer mandate of 26 U.S.C. § 4980H and the coverage offer reporting requirements of § § 6055 and 6056.
If you wondered why Congress dropped the ACA's anti-retaliation section into the Fair Labor Standards Act (as new § 18C), wonder no more. According to OSHA's interim final rules for the handling of such retaliation complaints, "The definitions of the terms ''employer,'' ''employee,'' and ''person'' from section 3 of the FLSA, 29 U.S.C. 203, apply to these rules and are included here." See 78 Fed. Reg. 13,224 (February 27, 2013) and 29 CFR § 1984.101. So, to find the limits of your ACA retaliation claim exposure, don't consult IRS "common law employee" guidance; instead, read the new DOL Administrator's Interpretation.
Here are factors that DOL considers critical to this analysis, with associated examples.
For a construction company that frames residential homes, carpenters are integral to the employer's business because the company is in business to frame homes, and carpentry is an integral part of providing that service.
A registered nurse who provides skilled nursing care in nursing homes is listed with Beta Nurse Registry in order to be matched with clients. The registry interviewed the nurse prior to her joining the registry, and also required the nurse to undergo a multi-day training presented by Beta. Beta sends the nurse a listing each week with potential clients and requires the nurse to fill out a form with Beta prior to contacting any clients. Beta also requires that the nurse adhere to a certain wage range and the nurse cannot provide care during any weekend hours. The nurse must inform Beta if she is hired by a client and must contact Beta if she will miss scheduled work with any client. In this scenario, the degree of control exercised by the registry is indicative of an employment relationship.
Think twice before replacing the "contractor" or "temp" who identified you as his non-offering, full-time "employer" so that he could obtain subsidized insurance through Healthcare.gov.