As Maria indicates in her comment, the first half or so of this post is my own commentary. The material below the line is the item from the Department of Labor. I apologize for any confusion.
One can argue that adjunct faculty whose primary employment is outside the college or university at which they are teaching are “independent contractors” in the strictest sense of the term.
But, for those increasing numbers of adjunct faculty whose primary employment is as instructors employed by multiple colleges and/or universities, the case can clearly be made that those institutions have been abusing the “independent contractor” classification every bit as much as employers in other sectors have been doing so. In fact, although increasing numbers of occupations requiring baccalaureate degrees or even graduate degrees are being “transformed” under this reclassification scheme, it seems very clear that higher education has almost singularly used this scheme to exploit those who hold advanced degrees.
Up until about a year or so ago, a significant percentage of those trying to earn their livings as adjunct faculty taught the equivalent of full-time loads at single institutions, while also picking up additional courses at other institutions. The passage of the Affordable Care Act has caused most institutions to begin limiting the number of courses that adjunct faculty can teach simply to avoid the requirement that the institutions provide those faculty with health insurance. Indeed, some institutions have begun sharing lists of available adjunct faculty in order to insure that the overall pool of available adjuncts can be efficiently exploited to continue to cover their needs.
Although the argument has long been made that such hiring practices have been necessitated by dramatic shifts in institutional sources of revenue, the concurrent expansive expenditures on administrative compensation and support staffing, on intercollegiate athletics, on elaborate construction projects, and on expensive amenities demonstrate that this exploitation of many of those serving the core missions of our institutions is not truly a matter of fiscal necessity but of grossly misplaced institutional priorities.
And, of course, what very much compounds the ethical issues involved in such exploitation is the fact that universities are recruiting students into graduate programs with the promise of satisfying and financially secure academic careers that they are then not providing.
I have no idea whether the Department of Labor guidelines on the misclassification of employees as “independent contractors” would in any way be legally applicable to the exploitation of adjunct faculty, but no one reading those guidelines can fail to recognize that the exploitation of those faculty is the result of the same mindset that has contrived the misclassification.
The Wage and Hour Division is tackling employee misclassification because so much depends upon the answer to that question.
Imagine working as a drywall installer building houses as an employee one day, but the next day, while performing the same work on the same site for the same company, you’re told you are now considered an independent contractor. You didn’t suddenly open a business of your own. Nothing about your work changed. But now, you’re told that since you’re no longer an employee, you’re no longer eligible for overtime pay, unemployment insurance, worker’s compensation or a host of other benefits that come with employee status.
That really happened to a group of workers recently, who we discovered were owed back wages after conducting an investigation. And unfortunately, this situation is all too common–with terrible consequences. Misclassified employees are often denied access to the critical benefits and protections they are entitled. Misclassification also generates substantial losses to the federal government and state governments in the form of lower tax revenues, as well as to state unemployment insurance and workers’ compensation funds. It forces workers to pay the entirety of their payroll (FICA) tax. It also tips the scales against all of the employers who play by the rules and undermines the economy.
In recent years, employers have increasingly contracted out or otherwise shed activities to be performed by other entities through, for example, the use of subcontractors, temporary agencies, labor brokers, franchising, licensing and third-party management. Among the many consequences of these “fissured workplaces,” misclassifying employees as independent contractors is among the most damaging to workers and our economy.
Whether a worker is an employee under the Fair Labor Standards Act is a legal question determined by the economic realities of the working relationship between the employer and the worker, not by job title or any agreement that the parties may make. The Labor Department supports the use of legitimate independent contractors–who play an important role in our economy–but when employers deliberately misclassify employees in an attempt to cut costs, everyone loses.
The Wage and Hour Division continues to attack this problem head on through a combination of a robust education and outreach campaign, and nationwide, data-driven strategic enforcement across industries.
We also will continue to work with the IRS and 22 states on this issue in a variety of ways–through, for example, information sharing and coordinated enforcement.
Clarity for Employers
As fissuring and misclassification have spread, providing workers and employers a clear understanding of what makes a worker an employee may be more important now than ever. Accordingly, we have issued an administrator’s interpretation that analyzes how the Fair Labor Standards Act’s definition of “employ” guides the determination of whether workers are employees or independent contractors under the law. It discusses the breadth of the FLSA’s definition of “employ,” and provides guidance on the “economic realities” factors applied by courts in determining if a worker is indeed an employee.
Ultimately, the goal of the economic realities test is to determine whether a worker is economically dependent on the employer (and is therefore an employee) or is really in business for him or herself (and is therefore an independent contractor). We believe in providing employers all of the information that they need to comply, and this document, with its discussion of the relevant law and inclusion of numerous examples, will help employers.
Our goal is always to strive toward workplaces with decreased misclassification, increased compliance, and more workers receiving a fair day’s pay for a fair day’s work.
Dr. David Weil is the administrator for the U.S. Department of Labor’s Wage and Hour Division