The key word is “suffer.”

Government contractors already face painful compliance burdens associated with the Fair Pay and Safe Workplaces Executive Order, the proposed implementing regulations, and the Labor Department’s “Guidance” amplifying the proposed regulations.  Last week, the Department added another layer of complexity when it issued an Administrator’s Interpretation of the Fair Labor Standards Act.  (Covington’s Employment group analyzed the Interpretation here.)  The fifteen-page Interpretation stems from the Department’s conclusion that companies are increasingly misclassifying employees as independent contractors.  It explains the Department’s view that the statutory definition of employ (“to suffer or permit to work”) informs the distinction between those classes of workers.  We hate to spoil an ending, but the bottom line is clear:  “most workers are employees.”

The Interpretation applies across a broad range of industries, but it presents special issues for government contractors.  Federal contracts in excess of $500,000 trigger obligations under the Paycheck Transparency provisions (section 5) of the Executive Order.  The proposed regulations require employers with covered contracts to provide each worker whom they classify as an independent contractor with “a document … informing the individual of that status.”  Contractors must look elsewhere for guidance on format and content of the document.

Continue Reading Labor Department’s Interpretation of the FLSA’s “Suffer or Permit” Standard Triggers More Compliance Burdens for Government Contractors