Christmas may be over, but you better watch out because DOL is “checking it twice” – and getting the Florida Department of Revenue’s assistance in their initiative to identify – and correct – independent contractor misclassification!

January 14, 2015 at 6:50 pm | Posted in Uncategorized | Leave a comment
Tags: accommodations, audit, business, compliance, Department of Labor, economy, employee, employer, fines, independent contractor, tax

Directly from the U.S. Department of Labor’s website:

News Release
WHD News Release: [01/13/2015]
Contact Name: Tania Mejia or Lindsay Williams
Phone Number: (202) 693-4686 or (678) 237-0630
Email: Mejia.Tania@dol.gov or williams.lindsay.l@dol.gov
Release Number: 15-0034-NAT
US Labor Department signs agreement with Florida Department of Revenue to reduce misclassification of employees

WASHINGTON — Officials from the U.S. Department of Labor and the Florida Department of Revenue today signed a memorandum of understanding with the goal of protecting the rights of employees by preventing their misclassification as independent contractors or other nonemployee statuses. Under the agreement, both agencies will share information and coordinate law enforcement. The MOU represents a new effort on the part of the agencies to work together to protect the rights of employees and level the playing field for responsible employers by reducing the practice of misclassification. The Florida Department of Revenue is the latest state agency to partner with the Labor Department.
In Fiscal Year 2013, WHD investigations resulted in more than $83,051,159 in back wages for more than 108,050 workers in industries, such as janitorial, food, construction, day care, hospitality and garment. WHD regularly finds large concentrations of misclassified workers in low-wage industries.
“Misclassification deprives workers of rightfully-earned wages and undercuts law-abiding businesses,” said Dr. David Weil, administrator of the Wage and Hour Division. “This memorandum of understanding sends a clear message that we are standing together with the state of Florida to protect workers and responsible employers and ensure everyone has the opportunity to succeed.”  “Working with the states is an important tool in ending misclassification,” said Wayne Kotowski, the Wage and Hour Division’s regional administrator for the southeast. “These collaborations allow us to better coordinate compliance with both federal and state laws alike.”  “By partnering with the U.S. Department of Labor we are actively working to level the playing field for Florida’s businesses to stop the misclassification of workers. Businesses that misreport workers obtain an unfair advantage over other law-abiding businesses,” said Florida Department of Revenue Executive Director, Marshall Stranburg.

Business models that attempt to change or obscure the employment relationship through the use of independent contractors are not inherently illegal, but they may not be used to evade compliance with federal labor law. Although legitimate independent contractors are an important part of our economy, the misclassification of employees presents a serious problem. Independent contractors are often denied access to critical benefits and protections, such as family and medical leave, overtime compensation, minimum wage pay and unemployment insurance, to which they are entitled. In addition, misclassification can create economic pressure for law-abiding business owners, who often find it difficult to compete with those who are skirting the law.
Memoranda of understanding with state government agencies arose as part of the department’s Misclassification Initiative, with the goal of preventing, detecting and remedying employee misclassification. Alabama, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington state agencies have signed similar agreements. More information is available on the Department of Labor’s misclassification website at http://www.dol.gov/misclassification/.
The mission of the department is to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and ensure work-related benefits and rights. To learn more about the FLSA’s requirements, call the Wage and Hour Division’s toll-free hotline at 866-4US-WAGE (487-9243) or visit its website at http://www.dol.gov/whd/.

From Hultman Sensenig + Joshi: This is a topic near and dear to our hearts; if someone works only for you, is paid a salary, has no tools or equipment, and you control nearly every aspect of their employment, is it highly doubtful that they are a legitimate independent contractor. With this new agreement between the U.S. DOL and the FL DOR, if either Agency pays an employer a visit to review your “employees” vs. “contractors”, the other agency will soon be there to review whether civil money penalties and back taxes are owed – this is an expensive proposition. Be proactive, review the status of the people you engage vs. employ, and get some assistance if you have any questions.

There is no legal advice given through this blog, nor is an attorney client relationship created through the reading of this blog.