DOL’s Renewed Focus on Worker Misclassification

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The U.S. Department of Labor has published a Request for Comments regarding its Proposal to spend $1,852,029.00 to conduct a first of its kind survey of employers and employees about their experiences and knowledge of worker misclassification – i.e., independent contractor status. The DOL’s proposal appears to be an effort to revive the stalled Employee Misclassification Prevention Act (S. 3254) (the “Act”) first proposed in 2010.

The Act would have amended the Fair Labor Standards Act to require employers to, among other things: 1) document their reasons for worker classification and make that documentation available to the DOL upon demand; and 2) notify workers of their classification and of their right to call upon the DOL to audit the employer’s classification practices. The DOL’s proposed Program would, among other things, permit the DOL to “conduct in-depth interviews of employers... [regarding] employer knowledge, attitudes, and practices around [misclassification]” and to “generate nationally representative samples of workers” presumably for the purpose of conducting in-depth interviews of workers.

The DOL’s justifications for the Proposal are almost identical to those used to justify the Act – misclassification deprives workers of rights to minimum wage and overtime protections, unemployment insurance, and workers comp insurance, and deprives the federal government of $2.7 billion annually in lost Social Security, unemployment insurance and income tax revenues. The Proposal also notes, as did the Act, that “Federal labor laws do not require employers to inform workers of their employment status [so] workers may not be prepared for the consequences of misclassification.”

The Proposal evidences the DOL’s continuing commitment to ferret out the estimated 30% of employers who misclassify workers, and to press ahead (on a regulatory level) with the Act’s corrective measures in an effort to recoup billions in lost tax revenues. Employers should carefully evaluate the propriety of their worker classifications. We can help.

For more information related to worker misclassification, or employment matters in general, please contact Kelly Kolb.

 

Topics:  DOL, FLSA, Independent Contractors, Misclassification

Published In: Labor & Employment Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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