SESCO’s Weekly Client Update

• The U.S. Department of Labor (DOL) has re-issued an Opinion Letter on the issue of independent contractor (IC) status. This Opinion Letter had been issued under the first Trump Administration, but was rescinded by the Biden Administration, and is now restored under the second Trump Administration. Under the Opinion Letter, the DOL examined six factors pertinent to IC status under the federal Fair Labor Standards Act (FLSA).
• The first factor is the nature and extent of the potential employer’s control. Unlike the focus of the Obama Administration on whether the business controls the manner and means by which the worker performs services, the Opinion Letter focuses on whether the company controls the right of a worker to provide his or her services to competitors of the company or his or her own clients.
• The second factor is the permanency of the relationship with the potential employer. Whereas the Biden and Obama Administrations treated a worker’s continuous relationship with a company as a factor indicating employee status, even if the worker had the right to provide services to its own clients or to a competitor, the Opinion Letter cites favorably to a court decision finding no permanency where the length of the working relationship “was the product of a mutually satisfactory arrangement.”
• The third factor relates to the worker’s investment in facilities, equipment, or helpers. The Obama and Biden Administrations compared the monetary investments of the company and the individual worker — a comparison that would almost always support employee status. This Opinion Letter, in contrast, focuses instead on whether the business provides the facilities and equipment to the worker instead of the worker purchasing his or her own tools and equipment.
• The fourth factor involves the skill and initiative required for the worker’s services.
• The fifth factor involves the opportunity for profit and loss. The differences between the prior Democratic Administrations’ position and the position of the first and second Trump Administration are less divergent on these two factors than the others.
• The sixth and last factor is the extent of the integration of the worker’s services into the potential employer’s business.

• The U.S. Department of Homeland Security (DHS) is revoking employment authorization documents for certain individuals affected by the termination of humanitarian parole, including beneficiaries of the program for Cubans, Haitians, Nicaraguans, and Venezuelans (better known as “CHNV”).

• Log in to E-Verify regularly to generate a Status Change Report.

• If the Status Change Report indicates that the EADs were revoked for current employees, immediately begin re-verifying each employee using Form I-9, Supplement B, and complete all re-verifications within “a reasonable amount of time.” A “reasonable amount of time” is not defined and may vary depending on the circumstances, including the number of employees who require re-verification.

• Employers are directed not to create a new E-Verify case for any affected employee, but only to use Form I-9, Supplement B, for re-verification purposes.