Emplaw Worker Classification

When to use

Use this when you need to decide how to classify a worker: employee versus independent contractor, and — for employees — exempt versus non-exempt from overtime. This skill applies the FLSA economic-reality test, the IRS common-law control test, the California ABC test, and the FLSA white-collar exemption duties tests. Not for: answering a specific overtime or break question once status is known (use emplaw-wage-hour-qa), reviewing a hire or offer (use emplaw-hiring-review), reviewing a firing (use emplaw-termination-review), investigating a complaint (use emplaw-internal-investigation), leave eligibility (use emplaw-leave-tracker), or drafting classification policy (use emplaw-policy-drafting).

Method

1. Frame the question: contractor-vs-employee, exempt-vs-non-exempt, or both. Confirm the operating state.
2. For contractor-vs-employee, run the applicable test. Decision point: if the state uses the ABC test (e.g., California), start there — it is the strictest and defaults to employee unless all three prongs are met; else apply the FLSA economic-reality factors and the IRS common-law control test.
3. Weigh the factors as a whole. Decision point: if the worker's economic dependence and the hirer's control point to employee, stop treating them as a contractor.
4. If the worker is an employee, test exemption. Decision point: if paid below the current DOL salary threshold or not on a salary basis, they are non-exempt regardless of duties.
5. If salary-basis and threshold are met, apply the duties test for executive, administrative, or professional. Decision point: if the primary duty does not fit a category, classify non-exempt.
6. Record the deciding factors, not just the conclusion.
7. Apply the attorney-escalation gate: misclassification exposure is high-cost — confirm with licensed counsel in the operating state; this is not legal advice.

Example

A California "consultant" works full-time, uses the company's tools, follows its schedule, and does core sales work. Under the ABC test the company cannot show prong B (work outside the usual course of business), so the worker is an employee. Paid $52,000 salaried, she is then tested for exemption: her primary duty is routine sales, not management or discretion, so she is non-exempt and owed overtime.

Pitfalls

• Relying on the contract label. A "1099" agreement or the worker's preference does not control; the tests look at economic reality and actual control.
• Assuming a salary means exempt. Exemption requires the salary basis, the current threshold, AND a qualifying duties test — all three.
• Applying the wrong state test. California and several states use ABC; using the federal economic-reality test where ABC governs understates risk.
• Ignoring that thresholds change. The DOL salary threshold is revised periodically — always check the current figure.

Output format

CLASSIFICATION — <worker/role> @ <state>
QUESTION: <contractor-vs-employee | exempt-vs-non-exempt | both>
TEST APPLIED: <ABC | FLSA economic-reality | IRS common-law | white-collar duties>
KEY FACTORS: <control / economic dependence / ABC prongs A,B,C>
CONTRACTOR-VS-EMPLOYEE: <conclusion + why>
SALARY BASIS + THRESHOLD: <met? current DOL figure>
DUTIES TEST: <executive | administrative | professional | none>
CLASSIFICATION: <employee non-exempt | employee exempt | contractor>
RISK: <LOW | MEDIUM | HIGH>
ATTORNEY GATE: Confirm with licensed counsel in <state>; not legal advice.

Reference

General reference only, not tailored legal advice.

• FLSA economic-reality test (contractor vs employee): weighs the worker's economic dependence on the business — opportunity for profit/loss, investment, permanence of the relationship, degree of control, whether the work is integral to the business, and skill/initiative. No single factor decides.
• IRS common-law control test: three categories — behavioral control (how work is done), financial control (investment, expenses, profit/loss, payment method), and the relationship (contracts, benefits, permanency, integral work).
• California ABC test (Dynamex / AB5): a worker is an employee unless the hirer proves (A) freedom from control, (B) work outside the usual course of the hirer's business, and (C) the worker is engaged in an independently established trade. All three prongs required.
• FLSA white-collar exemptions: require a salary basis, a salary at or above the current DOL threshold (which changes — direct to the current DOL figure), and a duties test — executive (managing, directing 2+ employees, hire/fire authority), administrative (office work directly related to operations, exercising discretion on significant matters), or professional (advanced knowledge / creative). Failing salary basis or threshold defaults to non-exempt regardless of duties.