Employer to pay $250,000 in back wages and damages following DOL investigation
Company pays more than $256,000 in back wages following DOL investigation
DOL recovers more than $219,000 in back wages and liquidated damages for 44 misclassified Boston-area restaurant employees
These are just a few examples of 2011 findings in investigations conducted as part of the DOL's Misclassification Initiative to vigorously examine the classification of employees/independent contractors.
In September 2011, as part of this initiative, a Memorandum of Understanding (MOU) was signed between the DOL and the Internal Revenue Service (IRS). Under this agreement, the agencies will work together and share information to "reduce the incidence of misclassification of employees, to help reduce the tax gap, and to improve compliance with federal labor laws." Additionally, the Department's Wage and Hour Division has signed MOUs with eleven states and other DOL agencies, including the OFCCP. These MOUs will enable the Department to share information and to coordinate enforcement efforts.
Classification of Independent Contractors is far from "cut and dry". The Supreme Court has said that there is no definition that solves all problems relating to the employer-employee relationship under the Fair Labor Standards Act (FLSA). The Court has also said that determination of the relation cannot be based on isolated factors or upon a single characteristic, but depends upon the circumstances of the whole activity. The goal of the analysis is to determine the underlying economic reality of the situation and whether the individual is economically dependent on the supposed employer. In general, an employee, as distinguished from an independent contractor who is engaged in a business of his own, is one who "follows the usual path of an employee" and is dependent on the business that he serves.
Further guidance on making Independent Contractor determinations may be found at the following websites:
Read more about the DOL's Misclassification Initiative
THOMAS HOUSTON associates, inc. can assist you in meeting the challenges that will arise as a result of the upcoming OFCCP's regulatory efforts. We offer pro-active and proven compliance tools and methods.
