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.
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