The FLSA identifies as an employee a person the employer "suffers or permits" to work. This broad definition is applied through the "economic realities" test, which focuses on whether is in business for himself or is economically dependent on the employer.
Today the Obama administration's DOL Wage & Hour Division issued a new administrative interpretation, in an effort to curb abuses in the overuse of independent contractors. The administration cited the negative effects of misclassification, including deprivation of workplace protections such as minimum wage, overtime payment, unemployment insurance, and workers' compensation, as well as lower government revenues and an uneven playing field for employers who properly class workers as employees, as justifying administrative intercession on the issue of contractor vs. employee.
This is another important step toward ensuring that American workers enjoy the fruits of their labor. Following on the heels of the announcement a couple weeks ago of the proposed updated FLSA regulations regarding the "white-collar" exceptions to the overtime and minimum wage requirements, it is advancing President Obama's legacy as a champion of American working peoples.
The new administrative interpretation of the employee vs. contractor issue can be found here.