Employers should be held accountable for worker surveillance, employee status

By Emily Andrews, Lorena Roque, and Reed Shaw

Earlier this week, the Center for Law and Social Policy and Governing for Impact submitted a comment to the U.S. Department of Labor (DOL) explaining our support for its proposed rule on the independent contractor versus employee classification. Our comment is supportive of the DOL’s proposal. Specifically, it applauds the Department’s decision to affirm its long-standing use of the multi-factor “economic realities” test and to explicitly discuss the impact of worker surveillance technology on a determination of employer “control.”

The proliferation of independent contracting, gig work, and worker misclassification has imposed significant harm on workers in low-wage industries and has undermined federal and state labor protections. The 2017 Bureau of Labor Statistics (BLS) Contingent Worker Supplement to the Current Population Survey, which measures workers in alternative work arrangements, estimated that 14 percent of gig workers earned less than the federal minimum wage and 29 percent earned less than the applicable state minimum wage. Gig workers face economic insecurity and rely heavily on public benefits. According to the BLS, 30 percent of gig workers used the Supplemental Nutrition Assistance Program (SNAP) within a month of the survey, which is twice the rate of employee-designated service sector workers. Accordingly, 1 in 5 gig workers could not afford enough to eat, and 31 percent of gig workers could not afford to pay the full amount of their utility bills in the month prior to the survey.

It is crucial that DOL’s Wage and Hour Division enforces the Fair Labor Standards Act (FLSA) evenly and fairly—and that the “economic realities” of the working arrangement determine independent contractor versus employee status. One of the six factors that contribute to this analysis is a consideration of the level and nature of control the employer has over the worker. Companies classify workers as independent contractors, in part, to avoid the costs and liabilities associated with having employees (e.g., paying a minimum wage and compensating them for overtime, as required by the FLSA). Simultaneously, some of these companies implement worker surveillance technologies that provide them the authority to exert control over their supposed independent contractors. If companies benefit from workers’ labor and integrate it into the company’s overall enterprise through control and supervision, that should weigh in favor of a finding of employee status.

Moreover, and as the proposal notes, the rule should weigh in favor of employee status regardless of whether the supervision is technological or in-person. While the “economic realities” test does not require direct supervision to find employee status, when it is present, that supervision is often key to courts making such a finding. Worker surveillance technology makes this type of supervision possible even without a supervisor physically present. Previous FLSA litigation helpfully illustrates why.

For example, a 2017 FLSA case that framing and drywall installers brought against their employer resulted in the Fourth Circuit highlighting the daily, on-site supervision of the workers as key evidence to find that they were employees. The supervision went well beyond the “oversight necessary to ensure that a contractor’s services meet contractual standards of quality and timeliness.” Instead, the supervisors provided frequent feedback and instruction about the pace and quality of their work. The supervisors repeatedly held meetings to direct the workers on which projects they needed to complete and the methods by which they should do so. Imagine if the employer had used worker surveillance technologies to accomplish these same objectives. Rather than requiring an in-person supervisor to provide frequent feedback about the pace and quality of work the employer could have implemented which would direct the workers to their next projects, optimize their route, and alert management to deviations.

As this example illustrates, worker surveillance technology replicates the same types of control that in-person supervision does. The presence of such surveillance should weigh in favor of employee status in the same way that in-person surveillance would.

Misclassification of workers as independent contractors is costly to workers, the government, and responsible employers who correctly classify their workforce. As our comment explains, the DOL’s proposed rule reaffirms the centrality of economic dependence based on multiple factors to determine employment status in a manner the DOL, Wage and Hour Division, and courts have used for decades. This would reduce the confusion for workers and employers arising from the anomalous rule proposed by the previous administration and benefit the public as a result.

Emily Andrews is the director of education, labor & worker justice at CLASP.

Lorena Roque is a senior policy analyst at CLASP.

Reed Shaw is a policy counsel at Governing for Impact.