The U.S. Department of Labor (DOL) recently issued a notice seeking comment on its proposal to collect information about “employment experiences and workers’ knowledge of basic employment laws and rules” so that it can develop a “better understanding” of worker misclassification issues. In particular, the DOL is exploring the misclassification of workers as independent contractors.
In the notice, the DOL says it intends to measure workers’ knowledge about job classifications and the rights and benefits associated with their job status to determine whether workers are aware of the consequences of misclassification. According to the DOL, employer misclassification of workers results in significant losses to the federal and state governments in the form of unpaid Social Security tax, unemployment insurance, and income tax. In recent years, states have enacted stiff penalties on employers who willfully misclassify workers as independent contractors to save on business costs and avoid paying appropriate taxes.
The proposed survey may signal the DOL’s renewed interest in pursuing “right to know” regulations discussed in its regulatory agenda in 2010. Those regulations would amend an employer’s recordkeeping requirements under the FLSA to require employers to create a written justification for classifying workers as independent contractors and to make that justification available to both the worker and to the DOL.
The proposed survey also likely signals the agency’s continued focus on misclassification issues, which continue to be a hot area of litigation and government enforcement. Employers should audit their worker classification decisions to ensure compliance with applicable tax, wage and hour, and other employment laws.
The public may submit comments on the DOL’s proposal until March 12, 2013.
Attorneys in Ballard Spahr’s Labor and Employment Group can assist clients in employee classification matters and other workplace issues. If you have questions, please contact Frank A. Chernak at 215.864.8234 or firstname.lastname@example.org, Kelly T. Kindig at 215.864.8652 or email@example.com, or the member of the group with whom you work.