The guidance points out that the FLSA defines “employ” broadly as including “to suffer or permit to work.” 29 U.S.C. 203(g). Thus, courts use the multi-factorial “economic realities” test to determine if a worker is an employee or independent contractor where all of the factors must be considered. Those factors are:
A. Is the work an integral part of the employer’s business?
B. Does the worker’s skill affect the worker’s opportunity for profit or loss?
C. How does the worker’s relative investment compare to the employer’s investment?
D. Does the work performed require special skill and initiative?
E. Is the relationship between the worker and the employer permanent or indefinite?
F. What is the nature and degree of the employer’s control?
Most workers are employees under the FLSA’s broad definitions and the "economic realities" test. Of course, the factors should not be analyzed mechanically or in a vacuum, and no single factor, including control, should be over-emphasized. Instead, each factor should be considered in light of the ultimate determination of whether the worker is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is its employee). The factors should be used as guides to answer that ultimate question of economic dependence. The correct classification of workers as employees or independent contractors has critical implications for the legal protections that workers receive, particularly when misclassification occurs in industries employing low wage workers.