The division’s investigation disclosed that these employees were paid straight-time rates for all hours worked instead of time and one-half their hourly rates for hours worked beyond 40 in a workweek. The employer also illegally deducted workers’ compensation payments from the employees’ earnings.
“Misclassification costs taxpayers millions of dollars each year in uncollected employment taxes, cheats employees out of wages they have rightfully earned and gives unscrupulous employers an unfair advantage. The Wage and Hour Division vigorously purses corrective action in those situations where employees are misclassified as independent contractors to recover all wages owed to the affected employees and to level the playing field for law-abiding employers,” said Pamela Sullivan, acting director of the Wage and Hour Division’s Nashville District Office. “We helped Rogers Mechanical Contractors understand their legal responsibilities, so that the employer will not commit such labor violations in the future. The resolution of this case should remind others to review their employment practices and ensure that their employees are not misclassified as independent contractors.”
Following the investigation, Rogers Mechanical Contractors agreed to maintain future compliance with the law and has paid all back wages due to the affected employees. The employer also committed to ensuring all workers are properly classified and to paying accurate overtime compensation to its employees, as required by the FLSA.
The misclassification of employees as independent contractors presents a serious problem for affected employees, employers and the entire economy. Misclassified employees often are denied access to critical benefits and protections—such as family and medical leave, overtime, minimum wage and Unemployment Insurance—to which they are entitled. Employee misclassification generates substantial losses to the U.S. Treasury and the Social Security and Medicare funds, as well as to state Unemployment Insurance and workers’compensation funds. Misclassification also creates a competitive disadvantage for employers who comply with the law.
Under the FLSA, employers must distinguish employees from bona fide independent contractors. An employee, as distinguished from a person who is engaged in a business of his own, is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business that he serves. For more information, visit http://www.dol.gov/whd.
The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week.
Source: DOL
This information is intended to be
educational and should not be considered legal advice on any specific matter.
