Testing: Contractors in the Virtual Marketplace

By Daniel Saeedi, Rachel L. Schaller

Jul. 19, 2019

Recognizing the proliferation of virtual marketplace companies (VMC) like Uber and TaskRabbit, the Wage and Hour Division of the Department of Labor issued an opinion letter applying the six-factor test to evaluate whether a service provider is an employee or independent contractor.

Control: The service provider has the flexibility to choose if, when, where, how and for whom they will work. The VMC lacks oversight concerning the quality of the service provided.

Permanency: The service provider is engaged on a project-by-project basis and is free to accept work from a competitor of the VMC. There are limited grounds upon which a service provider can be terminated.

Investment: The service provider invests their own money in the facilities, equipment or helpers needed to provide services on the VMC’s platform.

Skill and initiative: The service provider, through their own skills, initiative or judgment, is able to independently manage the work, and is not dependent on the VMC for training.

Opportunity for profit/loss: The service provider’s own skills, initiative and judgment dictate their opportunity for greater earnings or exposure to loss of their investment.

Degree of integration: The service provider does not develop the VMC’s platform and they are not integral to the business of referrals.

Also in Legal Briefings: 

Supervisor’s Unchecked Sexual Harassment

FMLA Leave: Designate Early and Often

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