To Include or Not to Include; Is That a <i>Darden</i> Question?

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The Office of Federal Contract Compliance Programs (OFCCP) adopted the Darden 1 factors in 2014, to assist federal contractors in determining whether certain types of employees should be included in a federal contractor's Affirmative Action Plan. While these factors do shed some light on determining whether someone is an employee or a contractor, it has limited application for positions held by students at academic institutions. This article will discuss the origin of the Darden factors and how they are applied, the history behind OFCCP's adoption of their use, and the perspective of the Department of Labor's (DOL) Wage and Hour Division, in light of a National Labor Relations Board (NLRB) case which has provided more confusion than clarity.

The Origin of the Darden Factors

The Darden factors resulted from a Supreme Court case, Nationwide Mutual Insurance Co. v. Darden, 503 US 318 (1992), in which the court was asked to determine whether Robert Darden was an employee of Nationwide Mutual or a contractor. As is often the case, the Supreme Court established guidelines for making the determination, and remanded the case to the lower courts to figure it out. The guidelines themselves are instructive, but require a case-by-case analysis.

Application of the Darden Factors

To determine whether a worker is an employee, one must assess and weigh each of the Darden factors with respect to its relationship with that individual. While no one factor will necessarily be decisive, the factors that indicate the extent to which the contractor controls the manner and means of the individual's performance of his or her work will typically be most important in the Darden analysis. The following are the factors to be considered (available on OFCCP's website at https://www.dol.gov/ofccp/regs/compliance/faqs/EmpRelationship.html):
 
  • The contractor's right to control when, where, and how the individual performs the job: The degree to which the contractor retains the right to direct and control how and when an individual performs his or her work is a strong indicator of whether an employment relationship exists, regardless of whether the contractor exercises that right. If the contractor retains substantial control over when, where, and how the individual performs work, that is a strong indicator that the individual is an employee. However, if the contractor has little control over the manner in which the work is performed, that may indicate that the individual is not an employee.

  • The skill required for the job: Independent contractors typically have their own methods for doing the work and are hired because of their specialized knowledge and expertise, or because such expertise is not routinely used in the contractor's business. However, if the work performed by an individual does not require such specialized skills or is a regular part of the contractor's normal business, this is an indicator that the individual may have an employment relationship with the contractor.

  • The source of the instrumentalities and tools: Generally, independent contractors procure and use their own equipment and materials needed to perform the work they are hired to do. If the contractor furnishes the tools, materials, and equipment for the individual to work, this will tend to show the existence of an employment relationship between the individual and the contractor.

  • The location of work: If the individual works at a location that is owned or controlled by the contractor, this may be an indicator that the individual is an employee, particularly if the individual's work can be performed elsewhere. However, if the individual retains the discretion to perform the work at another location, this may indicate a non-employee status.

  • The duration of the relationship between the parties: An extended, continuing relationship between the individual and the contractor without a pre-defined duration may indicate the existence of an employment relationship. Independent contractors generally do not have such an extended relationship since they usually perform discrete tasks over a pre-determined period of time that is agreed upon by the parties.

  • Whether the contractor has the right to assign additional projects to the individual: Independent contractors typically agree to provide very specific services to a company and usually have the freedom to accept or decline additional jobs. If the contractor has the right to assign additional work to an individual at its discretion, then this may indicate the existence of an employment relationship.

  • The extent of the individual's discretion over when and how long to work: If the contractor exercises control over the hours that the individual begins work and the duration of the workday, then this may indicate that an employment relationship exists. Independent contractors are usually constrained by timeframes for deliverables, but can exercise discretion over when they begin work and how long their workday is within those general constraints.

  • The method of payment: Independent contractors are generally paid an amount that is agreed upon in advance for performing a particular job. If an individual is paid a regular salary or is paid by the hour, week, or month, that may indicate the existence of an employment relationship.

  • The contractor's role in hiring and paying assistants: Employees generally do not hire and pay for their own assistants. If the individual has discretion to hire and pay for his or her own assistants without the approval of the contractor, that may indicate that the individual is an independent contractor.

  • Whether the individual's work is part of the regular business of the contractor: Employees typically perform jobs that are a regular or routine part of the employer's business, while independent contractors generally perform specialized work that lies outside of an employer's normal business.

  • Whether the contractor is in business: Employees are usually not engaged in their own separate business (or the business of another entity) when performing work for the contractor. Independent contractors, however, are usually engaged in their own separate business when they perform work for the contractor.

  • The provision of employee benefits to the individual: Employees typically receive benefits from the contractor, such as health insurance, life insurance, leave, or workers' compensation, while independent contractors do not normally receive such benefits from the contractor.
Historical Perspective on OFCCP's Use of the Darden Factors

In 2010, I started a discussion among representatives from several academic institutions to address some of the challenges academic institutions face in complying with the regulations. I began working with the American Association for Access, Equity and Diversity (formerly the American Association for Affirmative Action) to generate issues to discuss with OFCCP. One of the issues identified was determining which, if any, workers who are also students should be included as employees in their affirmative action plan. We found that the academic federal contracting community did not share a common approach to the issue.

On July 10, 2012, Dr. Inderdeep Chatrath (Duke University) and I met with OFCCP to discuss several issues of concern to the academic community. In attendance were Debra Carr (Director, Division of Policy, Planning & Program Development), Naomi Levin (Branch Chief for Policy Development & Procedures, Division of Policy, Planning & Program Development), Gilberto Garcia (Branch Chief for Field Liaison Operations & Technology, Division of Program Operations), and Caitlin Grimmer (intern). For about two hours we discussed six issue areas outlined in the document we submitted to Director Shiu, at her request, in May 2012. It was clear from the conversation that OFCCP was very interested in providing clarity on these issues. We had a second conversation with OFCCP three weeks later, during which OFCCP introduced the Darden factors as a means for clarifying inclusion issues.

OFCCP asked Dr. Chatrath and I to list some examples of academic positions, conduct an analysis using the Darden factors for each, and provide the analyses to OFCCP. Dr. Chatrath and I tackled the positions that seemed to be the most challenging: graduate and undergraduate teaching assistants, graduate research associates, instructional officers, graduate fellow assistants, and work study students. But we realized fairly quickly that while the Darden factors do an excellent job of determining whether someone is an employee or a contractor, they are inadequate for determining whether a student is an employee for purposes of including them in a federal contractor's affirmative action plan.

Academic positions are just different.
 
Private Sector Employment (Some) Work in Academia
Most qualified candidate is hired Candidate most in need of experience is selected
Positions open to outside Candidates must be student at institution
Positions created then filled Work study positions are created for students in need
Primary purpose is $$$ Primary purpose is education


Dr. Chatrath and I discussed our concerns with OFCCP and recommended against using the Darden factors to determine the employment status of positions primarily held by students. However, in early 2014, OFCCP published the Darden factor FAQ (referenced above). To their credit, the first example provided is an application of the factors to a position commonly found in academic institutions -- adjunct faculty. Applying the Darden factors to a specific set of facts (provided in the example), OFCCP concludes that adjunct faculty, under the circumstances outlined in the example, should be included in the affirmative action plan. No other examples of academic positions are provided.
...while OFCCP has not issued formal guidance on the subject, the Department of Labor generally speaks with one voice on the subject of who is or is not an employee.
The NLRB Columbia Case and DOL's Wage and Hour Division Guidance

On August 23, 2016, the NLRB, in The Trustees of Columbia University in the City of New York and Graduate Workers of Columbia– GWC, UAW. Case 02–RC–143012, overturned a prior decision, Brown University, 342 NLRB 483 (2004), and defined “employees” to include graduate and undergraduate teaching assistants, graduate research associates, instructional officers, graduate fellows assistants, and work study students for the purposes of collective bargaining. Immediately following this decision, I discussed it with an attorney in the Department of Labor's Solicitor's Office who handles OFCCP matters, and asked whether the case has any bearing on OFCCP federal contractor compliance and the inclusion of such positions in an affirmative action plan. He said that while OFCCP has not issued formal guidance on the subject, the Department of Labor generally speaks with one voice on the subject of who is or is not an employee.

On May 18, 2016, the Department of Labor's Wage and Hour Division issued “Guidance for Higher Education Institutions on Paying Overtime under the Fair Labor Standards Act,” which provided clarification on some positions at academic institutions:
 
  • Postdoctoral fellows are considered employees. Postdoctoral fellows are not considered students because they are not working towards a degree; they conduct research at a higher education institution after the completion of their doctoral studies.

  • Graduate teaching assistants are considered employees.

  • Research assistants are not considered employees. Generally, DOL views graduate and undergraduate students who are engaged in research under a faculty member's supervision in the course of obtaining a degree as being in an educational relationship with the school. As such, the Department would not assert an employment relationship with either the school or any grantor funding the research, even though the student may receive a stipend for performing the research.

  • Student residential assistants enrolled in bona fide educational programs who receive reduced room or board charges or tuition credits from the university are not generally considered employees.

  • Other student workers are generally considered employees when their duties are not part of an overall education program and who receive some compensation. For example, students who work at food service counters, sell programs or usher at athletic events, or who wait on tables or wash dishes in dining halls in anticipation of some compensation (money, meals, etc.) are generally considered employees.
The foregoing list is not comprehensive, as many types of workers are not addressed in the guidance (i.e. undergraduate teaching assistants, graduate research associates, instructional officers, and work study students), but it provides some insight as to how the Department of Labor generally regards several classes of student employment. I will continue working with OFCCP to provide additional clarification for academic institutions in determining which employment classifications should be included in a federal contractor's affirmative action plan. Stay tuned!

Please note: Nothing in this article is intended as legal advice or as a substitute for any professional advice about your organization's particular circumstances. All original materials copyright © Schuyler Affirmative Action Practice 2018.

1. Factors for determining whether a person is an employee or a contractor were provided in the opinion of the Supreme Court case of Nationwide Mutual Insurance Co. v. Darden, 503 US 318 (1992).