WASHINGTON – On July 15, the U.S. Department of Labor’s Wage and Hour Division issued Administrator’s Interpretation 2015-1, which analyzes how the Fair Labor Standards Act’s (FLSA) definition of “employ” guides the determination of whether workers are employees or independent contractors.

The Wall Street Journal reports that so-called employee misclassification has become a hot topic recently as hundreds of growing businesses, such as Uber, have turned away from traditional hiring practices in favor of contract workers. The guidance — the division’s first on this matter since President Obama took office — seeks to clarify that under the FLSA, the definition of employee “is broader than what some employers believe and what some court rulings have determined.”

The news source notes that the business community believes the agency has revealed a one-sided interpretation of the FLSA that will penalize employers’ legitimate use of independent contractors. Former Labor Department lawyer Tammy McCutchen said the language in the guidance stretches the definition of employee and “essentially declares war on the use of independent contractors in certain industries” such as call centers, construction, technology and janitorial services.

David Weil, administrator of the Wage and Hour Division, told the news source that the new guidance doesn’t “amount to a change in policy” but is instead meant to provide “greater clarity to the employer community” and workers. He noted that “courts have used this kind of guidance in setting opinion,” but aren’t bound by it.

The guidance was released almost two weeks after the Department of Labor issued its proposed rule to update the salary threshold under which employees must be paid overtime rates for hours worked. NACS will be submitting comments in response to that proposal.