Employers should realize by now that misclassification of employees as independent contractors can result in a host of legal problems. These include claims based on failure to withhold taxes, provide unemployment and Workers’ Compensation coverage, overtime and minimum wage violations, and entitlement to employee benefits. On August 29 however, the National Labor Relations Board found that misclassifications do not constitute violations of the National Labor Relations Act.
In Velox Express, Inc., employees misclassified as contractors filed an unfair labor practices claim with the NLRB, alleging that this non-employee status prevented them from unionizing in violation of the NLRA. The board majority concluded that the mere misclassification did not violate the workers’ right to organize, because the company never threatened termination or any other sort of adverse action against them. Absent something more than the misclassification itself, this act was insufficient to constitute a NLRA violation.
Despite this decision, companies continue to face a slew of legal claims based on alleged worker misclassification. The test for true independent contractor status is difficult to meet, and most persons serving in roles where the means and methods of work performed are supervised and regulated by the company will not meet these criteria.
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