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Total Articles: 74

Implications of COVID-19 on Your Health and Welfare Benefit Plans

Employers are grappling with employee benefit issues in response to the 2019 Novel Coronavirus (“COVID-19”). Efforts are being made to pave the way for widespread testing by eliminating cost barriers such as deductibles, copayments, coinsurance, or High Deductible Health Plan restrictions to ensure employees and their families are proactively being diagnosed once symptoms present, to ensure proper care management for the participant, and to assist in preventing the spread of the virus.

Fifth Circuit Provides Positive Guidance on Independent Contractor Classification

Executive Summary: Applying the “economic realities” test, the Fifth Circuit (with jurisdiction over federal courts in Louisiana, Mississippi, and Texas) recently held that a consultant for an oil and gas company was not subject to FLSA overtime requirements because he was an independent contractor.

Expect A Trio Of Federal Joint Employment Rules In December

Joint employment took center stage yesterday during the release of the Fall Regulatory Agenda, as three separate federal agencies announced plans to move forward with revised joint employment rules in December. While the Department of Labor and the National Labor Relations Board had already released versions of their draft rules, it came as somewhat of a surprise to see the Equal Employment Opportunity Commission also announcing that it would weigh in on the topic before the end of 2019. With the uncertainty of an election year coming up in 2020, it appears that the agencies are kicking into overdrive in order to clarify joint employment standards as soon as possible.

Could 2020 Be The Year Of The California Copycats? Other States Line Up To Consider Misclassification Statutes

Gig economy businesses across the country looked to what happened in California this year and cringed. Other states looked there and were intrigued. After California passed the most aggressive independent contract statute in the nation in 2019 and made it extremely difficult for gig economy businesses to classify their workers as independent contractors, a string of states are considering their own equivalent statutes. 2020 could be the year that the ABC test spreads far and wide across the country.

Beltway Buzz, June 7, 2019

Who’s Running USCIS? The Buzz was away last week, so we didn’t get a chance to comment on the departure of L. Francis Cissna from U.S. Citizenship and Immigration Services (USCIS). It has been reported that former Virginia attorney general Ken Cuccinelli would assume Cissna’s former role, but to date, no official nomination has been announced. Perhaps Cuccinelli’s name was floated out there as a trial balloon to see how his nomination might be received in the U.S. Senate. After all, Cuccinelli has been publicly critical of Republican leadership, so he might not even enjoy the backing of his own party. In the meantime, Mark Koumans is serving as the acting director of USCIS. Suffice it to say that this game of musical chairs can only create uncertainty for employers that rely on foreign workers to meet their workforce demands.

Department of Labor: Workers in Virtual Marketplace Companies Are Independent Contractors

Virtual marketplace companies such as Uber, Lyft, and Handy are receiving a boost in their quest to classify workers as independent contractors. The U.S. Department of Labor issued a new guidance opinion about whether a worker is an employee or an independent contractor. This guidance, issued April 29, 2019, is the first issued during the Trump era. It discusses the hot-button topic of employee versus independent contractor classification involving a virtual marketplace company.

DOL Extends Comment Periods for Proposed Joint Employer and Regular Rate Regulations

Citing the interest expressed by “law firms, unions, and advocacy organizations, among others,” the U.S. Department of Labor (DOL) has extended the period for public comment on recently-issued Notices of Proposed Rulemaking (NPRM) regarding amendments to the regulations concerning determination of the “regular rate” of pay under the Fair Labor Standards Act (FLSA) and to amendments clarifying what constitutes a “joint employer” under the Act.

DOL Weighs in on Whether Gig Economy Workers are Employees or Independent Contractors

he United States Department of Labor has provided good news for gig economy employers, telling one unidentified “virtual marketplace” employer that its service providers are properly classified as independent contractors. While advisory and non-binding, the April 29, 2019, Opinion Letter FLSA2019-6 provides insight into how the current DOL views independent contractor (mis)classification, and continues this administration’s departure from the DOL guidance under the Obama administration that assumed most workers are employees and not independent contractors.

DOL Opinion Letter Finds Gig Economy Service Providers to Be Independent Contractors

In what appears to be a first, the U.S. Department of Labor (DOL) has weighed in on the status of gig economy workers under the Fair Labor Standards Act (FLSA) in the form of an opinion letter.

Labor Board Makes It Easier To Classify Workers As Independent Contractors

In a significant ruling which will benefit companies, the National Labor Relations Board today revised the test it uses for determining whether workers are employees or independent contractors by making it easier for entities to classify them as contractors (SuperShuttle DFW, Inc.). The decision throws a roadblock into unionization efforts involving such workers, as federal law does not permit independent contractors to unionize or join forces with employees in organizing efforts. What do employers need to know about this development?

New Agency Insights On Independent Contractors

Staffing agencies fill the demand for temporary workers. Rideshare companies use apps to match people needing a ride with people willing to give them a ride. Health care registries dispatch caregivers to clients’ homes. The burning question is: When does the matchmaker cross the line and become an employer of its “independent contractors”? Two recent documents issued by a federal agency and a state agency provide some insight into this question, at least from the administrative agency standpoint.

Labor Department Independent Contractors Guidance Targets Home Care, Nursing, Caregiver Registries

In its first substantive guidance on independent contractors, the Trump Administration has targeted misclassification in the healthcare industry.

Trump Administration DOL Issues First Substantive Guidance on Independent Contractors

The Wage and Hour Division of the Department of Labor (DOL) issued a Field Assistance Bulletin (FAB) on Friday, July 13, 2018, titled “Determining Whether Nurse or Caregiver Registries Are Employers of the Caregiver.”1 Although this FAB focuses on the caregiver registry industry, it provides the new administration's first substantive guidance on independent contractor classification.

Will New Misclassification Standard Wipe The Grubhub Trial Victory Off The Books? Plaintiff Takes First Step Under ABC Test

Late Friday afternoon, the attorneys for the worker who came out on the losing end of the Grubhub misclassification trial asked the appeals court to return the case to the lower court for a new hearing. Their reasoning? Last week’s momentous Dynamex ruling by the California Supreme Court changed the standard that courts should follow when making a classification determination between employee and independent contractor, and the plaintiff wants the court to take a fresh look at the case with this new standard in mind. This maneuver was all but inevitable, and gig companies around the country (but especially in California) should pay close attention to the proceedings to see how this development might impact them.

Would These Star Wars Characters Be Contractors Or Employees Under The New “ABC” Test?

May the 4th has become known as Star Wars Day given the movie franchise’s most famous tag line. Today provides an opportunity for us to examine a recent employment law development of massive significance—a great disturbance in the Force, if you will—and how it would impact Star Wars characters if they were subject to modern misclassification principles.

You Win Some, You Lose Some: A Review Of Some Recent Misclassification Decisions

At the forefront of mind of every gig economy company is the troublesome question of whether its workers are properly classified as independent contractors. Just search our blog for cases involving “misclassification” and you’ll see dozens of examples of cases touching on this subject. It’s always a good idea to stay on top of the latest decisions involving misclassification questions; for this reason, here’s a review of three recent cases from across the country dealing with this issue. Two of them turned out favorably for businesses (you win some), and one of them turned out poorly (you lose some). Reviewing them will hopefully shed further light on the misclassification question and provide some guidance on operating your gig economy company.

An Appealing Update on the Grubhub Misclassification Case

We knew we hadn’t heard the end of this case, but today it’s official: the worker who lost what is believed to be the nation’s first-ever gig economy misclassification trial last month has filed an appeal with the 9th Circuit Court of Appeals.

Grubhub Notches Victory for Gig Economy in Big Classification Win in California Federal Court

In a recent classification case involving the “gig” or shared economy, a U.S. magistrate judge handed down a significant win for Grubhub, concluding that a driver who sued the company under California’s minimum wage, overtime and employee expense reimbursement laws was not covered by those laws because he was an independent contractor, not an employee.

Proposed Joint Employment Law Clears Important Hurdle, Passes House

By a vote of 242 to 181, the House of Representatives passed the “Save Local Business Act” today, a bill that would significantly narrow the definition of “joint employment” and limit employers’ wage and labor problems. HR 3441 will now move to the Senate, and if it passes a vote there and receives the signature of the president, it will significantly reduce the risk of unwarranted legal claims based on a claim of joint employment.

A Comprehensive Review Of The Grubhub Trial Closing Arguments

After a five-hour closing argument session in a California federal court on Monday, the gig economy is waiting with baited breath and trying to hazard their best guesses about how the judge will rule in the high-stakes Lawson v. Grubhub misclassification trial. Will Judge Jacqueline Scott Corley determine that former driver Raef Lawson was properly characterized as an independent contractor, dashing his hopes of a larger recovery and giving the gig economy in general a much-needed legal boost? Or will she determine that he was an employee all along, sending ripples of panic through the headquarters of gig economy companies across the country?

Summary Of Post-Trial Briefs Filed In Grubhub Misclassification Case

The parties in the Grubhub misclassification case are back in court on Monday, October 30, delivering their final closing arguments to the judge. We’ve written about the trial extensively; if you need a refresher, you can do so here, here, here, and here.

Are Noncompetes With Independent Contractors Enforceable?

Employers have been focused on the distinction between employees and independent contractors of late. The classification considers numerous factors and comes with it serious consequences. An incorrect decision to label a worker as an independent contractor could result in significant liability.

A Look-In At The Halfway Point In The Critical GrubHub Trial

As readers of this blog know, we are right in the midst of one of the most significant legal developments for the gig economy. For the first time, a judge is being asked to definitely decide at trial whether a typical on-demand worker is correctly classified as an independent contractor or whether he is actually an employee. The two-week trial started last week, the Tuesday after Labor Day, and apparently there have been some interesting developments in the proceedings so far.

Could A Proposed Federal Law Solve The Misclassification Riddle?

For years, businesses have struggled with properly identifying workers as either independent contractors or W-2 employees. The hundreds of thousands of jobs created by the gig economy have complicated matters even further. Over the years, administrative bodies have attempted to craft tests to be used in the classification process.

Dear Littler: A potential new hire shaved his head after learning about our drug-testing policy. Now what?

He insists that he cannot provide a hair sample for testing purposes.

House Hearing Explores Legislative Remedy to Joint Employer Confusion

On July 12, 2017, the U.S. House Committee on Education and the Workforce held a hearing concerning the need for legislation to redefine the joint employer standard.1 As many employers are aware, the interpretation of when employers constitute “joint employers” has been expanded in the last few years, by the U.S. Department of Labor, the National Labor Relations Board, other regulatory bodies, and the courts. In the hearing, led by Chairwoman Virginia Foxx (R-NC), several witnesses highlighted the difficulties posed by the evolving joint employer standard, particularly for small businesses. Witnesses and representatives considered whether legislation could alleviate, or might aggravate, the confusion felt by many employers. This summary provides a background of this emerging issue as well as a brief overview of the hearing.

The Square Peg and the Round Hole – W2 Driver or IC? Let the Judge (as the Jury) Finally Decide!

GrubHub, the food delivery app, has been in a legal battle with a former delivery driver over the driver’s classification as an independent contractor since 2015. Initially filed as a class action in state court in San Francisco, the case was removed to federal court where U.S. Magistrate Judge Jacqueline Corley of the Northern District of California ruled in 2016 that the case would not proceed as a class action.

Next Crack In The Wall: NY Uber Drivers Held To Be Employees

Back in October, we reported that there appeared to be the first crack in the wall when it came to classifying Uber drivers as employees instead of independent contractors. At that time, it was reported that the New York State Department of Labor made the determination while granting the drivers unemployment benefits. We weren’t sure how much of an impact these cases would have, however, and concluded by saying “it's unclear how far worker advocates will push these decisions. If they do go to their next levels of review, it is possible for New York's appellate courts to be called upon to step into the fray.”

Department of Labor Withdraws Guidance on Joint Employment and Independent Contractor Classification

U.S. Secretary of Labor Alexander Acosta announced on June 7, 2017 that the Department of Labor (DOL) is withdrawing its 2015 and 2016 guidance on joint employment and independent contractors. The withdrawal indicates a possible shift in focus for the DOL, away from the increased scrutiny of business arrangements under the Obama administration.

Not Yet Time To Pop Champagne Corks After IC Guidance Withdrawn

Earlier this week, the U.S. Department of Labor dropped a bit of a bombshell when it announced the immediate withdrawal of two informal guidance letters issued back when President Obama governed the executive branch.

DOL Withdraws Obama Era Interpretations On Independent Contractors and Joint Employment

On June 7, Secretary of Labor Alexander Acosta announced the withdrawal of two Administrator Interpretations (“AIs”) issued under the Obama administration regarding joint employment and independent contractors. We previously discussed the AI on independent contractors here, and the AI on joint employment here and here.

DOL Withdraws Independent Contractor and Joint Employment Guidance

On June 7, 2017, Labor Secretary Alexander Acosta announced that the U.S. Department of Labor (DOL) has withdrawn two informal guidance documents on independent contractor misclassification and joint employment, both issued during the Obama administration.

Classifying Gorsuch’s Views On Misclassification

With the recent confirmation of Neil Gorsuch, the Supreme Court is now back up to its full complement of nine justices. While the current Court term has largely been devoid of blockbuster workplace law decisions – which could be the product of the sitting justices not wanting to resolve significant cases with only eight members – observers are already looking forward to what many believe will be a scintillating 2017-2018 term.

Is This Your New Roadmap To Misclassification Success? Maybe.

This is a big deal The 2nd Circuit Court of Appeals came down in favor of a sharing economy business in a misclassification case yesterday, ruling that a group of black-car drivers were independent contractors and not employees, therefore not entitled to overtime pay. My partner Michael Marra and I wrote an article about the decision, which you can find here.

Federal Court Provides Roadmap For Misclassification Success – Sort Of

A federal appeals court in New York handed a massive victory to a car service enterprise yesterday, ruling that a group of workers seeking to collect overtime payments were not actually employees and were properly characterized as independent contractors (Saleem v. Corporate Transportation Group, Ltd.). In issuing the ruling, the 2nd Circuit Court of Appeals provided what may superficially appear to provide a roadmap for technology businesses that digitally connect workers with consumers to understand, and avoid, misclassification risk. Upon a closer inspection, however, that roadmap may not always help such businesses arrive safely at their destinations…

Latest Misclassification Settlement Fails To Lyft Sharing Economy Companies

Late last week, a federal court judge in California approved a settlement agreement whereby ride-sharing company Lyft agreed to pay $27 million to approximately 95,000 California drivers who alleged they were misclassified as independent contractors.

Uber’s Latest Win Provides Roadmap For Sharing Economy Companies Battling Misclassification

I coauthored an article last week about Uber’s big misclassification victory in a California court. This decision has not (yet) received the national attention it deserves, probably because of the procedural quirks involved in the case. Long story short: a deactivated driver tried to get his access to Uber’s platform reinstated by claiming he was actually an employee and not a contractor, but an arbitrator ruled in Uber’s favor and rejected his claim. Several months later, a state court judge quietly affirmed the opinion. Although this decision has somewhat flown under the radar, it is worth paying attention to.

Happy Holidays From The DOL: User-Friendly Webpage On Independent Contractors Misclassification Arrives

On December 19, the U.S. Department of Labor (DOL) issued what it describes as a “user-friendly webpage where workers, employers, and government agencies can find information and resources” about misclassification of workers as independent contractors.

USDOL Recruits Whistleblowers for Misclassification Claims: Will Gig Workers Even Notice?

The United States Department of Labor (USDOL) recently revised its wage and hour poster to include information on the misclassification of workers as independent contractors. As noted in our previous legal alert on this issue, the revised poster includes language informing workers on the importance of knowing the difference between being an employee versus a contractor “because employees (unless exempt) are entitled to the FLSA’s minimum wage and overtime pay protections.”

Gig Employer Blog Would The Government Classify This Star Wars Character As A Contractor or Employee?

A short time ago, in a location not too far away (Washington, D.C.), the U.S. Department of Labor issued a new interpretation in an effort to further crack down on the perceived problem of employee misclassification. This was yet another example of the government being out of step with the realities of the modern business world. So much so, in fact, that the DOL would probably apply its predictable and out-of-date rules beyond the modern business world to worlds beyond our galaxy. In fact, the agency would likely find that a popular Star Wars character is an employee and not an independent contractor.

What The 100M Uber Settlement Means To All Employers

The ride-sharing company Uber recently announced a preliminary $100 million agreement to settle claims alleging that it improperly classifies its workforce as independent contractors. Because the settlement involves the foremost business entity in the new gig economy, this is a groundbreaking agreement that could provide guidance to many other emerging businesses that take advantage of the sharing environment. For all other businesses, it serves as a stark reminder of the pitfalls that can result from categorizing your workers as contractors.

Uber Willing to Pay 100M to Keep Its Drivers Classified as Independent Contractors

Recently, Uber announced that it agreed to pay drivers in California and Massachusetts $100 million in an effort to ensure that the drivers are considered independent contractors, not employees. In just six years, Uber has expanded from its base in San Francisco to over 300 cities across the world. With more than 450,000 drivers using the company’s app each month in the U.S. alone, a determination that its drivers were misclassified as independent contractors rather than employees could be extremely costly for the ride-sharing company, currently valued at $62.5 billion.

Independent Contractor Versus Employee Employer Beware

Every employer must face and resolve the question of whether its labor force is comprised of employees or independent contractors. Misclassifying employees in the wrong category has significant and dire consequences. Failing to properly classify workers subjects an employer to civil penalties, class actions, fines and the assessment of back taxes, among other consequences. Additional costs can also arise when misclassified workers, who would otherwise be entitled to employee benefits, haven’t been provided those benefits.

New York Federal Court Finds Business Properly Classified Translators As Independent Contractors

This month, two New York federal judges reviewing a claim of misclassification rejected a claim for overtime compensation, agreeing that a business properly classified two translators as independent contractors rather than as “employees” under the Fair Labor Standards Act and the New York Labor Law. See Mateo v. Universal Language Corp., 2015 U.S. Dist. LEXIS 128638 (E.D.N.Y. Sept. 4, 2015), aff’d by 2015 U.S. Dist. LEXIS 128377 (E.D.N.Y. Sept. 23, 2015).

Are Your Contractors Actually Employees? DOL Says Probably Yes

Last month, the U.S. Department of Labor (USDOL) issued an Administrator's Interpretation aimed at addressing what it characterizes as the “problematic trend” of employers misclassifying workers as independent contractors rather than employees. In issuing this guidance, the USDOL sent a signal that reviewing employers’ use of independent contractors will be an enforcement priority. In other words, hospitality businesses: consider yourself warned.

Red Flags for Homebuilders Related to DOL's Latest Guidance on Independent Contractors

On July 15, 2015, the U.S. Department of Labor (DOL) issued an “Administrator’s Interpretation” (AI 2015-1) providing guidance on whether workers are employees or independent contractors under the Fair Labor Standards Act (FLSA). The Wage and Hour Division of the Department of Labor ceased issuing opinion letters in 2009 at the beginning of President Obama’s administration. In place of opinion letters, the Wage and Hour Division occasionally issues administrative interpretations designed to provide meaningful and comprehensive guidance to both employers and employees. AI 2015-1 makes it clear that the Department of Labor contends too many workers are misclassified as independent contractors throughout the country.

DOL’s Recent Guidance on the “Economic Realities” Test and Effects on Independent Contractor Misclassification in the Energy Industry

Paying hot-shot drivers by the load or mile? Contracting out repair work to vehicles or machinery? Are individuals who regularly perform work integral to your business being paid through accounts payable? Have welders that you regularly call for work? Under new guidance published by the U.S. Department of Labor (DOL), what might be considered standard or normal practices in the energy industry could expose employers to claims and the risk of significant damages under the Fair Labor Standards Act (FLSA).

What Independent Contractors and Dodo Birds May Soon Have In Common

Yesterday, the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) issued its first Administrator Interpretation of 2015 on the heels of the proposed white collar exempti on revisions that would greatly expand the universe of overtime - eligible employees, as addressed in our Client Alert dated July 1, 2015. Aimed at rectifying what the WHD views as an in creasing and widespread misclassification of employees as independent contractors, the interpretation proclaims that “most workers are employees under the FLSA.” Conceding that independent contractor relationships can be advantageous for workers and busine sses, the WHD cites the loss of payroll tax revenues to the government and loss of workplace protections and benefits for workers, such as overtime, minimum wage, and insurance, as the need for additional guidance regarding who is an employee under the Fai r Labor Standards Act (FLSA). The full text of the Interpretation can be found here .

Independent Contractor or Employee: DOL's Latest Guidance on Employee Status

On July 15, 2015, the U.S. Department of Labor (DOL) issued guidance on determining whether a worker is an independent contractor in the form of an “Administrator’s Interpretation.” Describing independent contractor misclassification as resulting in an “uneven playing field for employers” and as a “means to cut costs and avoid compliance with labor laws” for other employers, it is no surprise that the DOL’s Administrator’s Interpretation No. 2015-1 adopts perhaps the most expansive definition of “employee” possible. Specifically, the DOL outlines that the economic realities test governs the determination of independent contractor status.

Expect USDOL Independent-Contractor "Clarification" This Summer

Employment Law360 recently reported U.S. Wage and Hour Division Administrator David Weil's announcement that he will soon release an Administrator Interpretation stating "a very clear set of criteria" delineating the agency's view of who is and is not a "legitimate independent contractor" under the federal Fair Labor Standards Act.

Employee or Independent Contractor? Why it Matters to Your Dental Practice

Every employer must tackle whether its labor force is composed of employees, independent contractors, or a combination. The appeal of the independent contractor classification is understandable because of the significant benefits, including eliminating the need to pay payroll taxes, secure workers’ compensation insurance, or make unemployment insurance withholdings. Independent contractors do not receive overtime or double time pay, meal breaks, or rest breaks.

Employee or Independent Contractor: Why It Matters?

Every employer eventually tackles the question of whether its labor force is composed of employees, independent contractors, or a combination of both. The appeal of the independent contractor classification is understandable because the benefits are significant, including the elimination of the need to pay payroll taxes, secure workers’ compensation insurance or make unemployment insurance withholdings. Independent contractors also do not receive overtime pay, or meal or rest breaks.

The Evolution of Employment Law

An article in the Wall Street Journal talks about one possible new construct: dependent contractors. What if There Were a New Type of Worker? Dependent Contractor. I don't know if that one will ultimately fly, but I do think it is likely there are going to be some new thinking.

Supreme Court Declines to Hear Challenge of Illinois Independent Contractor Classification Law

On October 14, 2014, the Supreme Court of the United States refused to consider a challenge to the Illinois Employee Classification Act, which classifies workers in the construction industry as employees unless they can meet the detailed requirements of the statute for independent contractor status. The Supreme Court denied the petition for writ of certiorari, meaning that the decision by the Illinois Supreme Court earlier this year will stand.

Employers Must Prepare for Scrutiny as Federal and State Labor Departments Join Together to Fight Employee Misclassification

Employers across the country continue to misclassify workers as independent contractors rather than as employees, and as we recently saw in Alexander v. FedEx Ground Package System, Inc., such actions can result in litigation and federal and state scrutiny.

Ninth Circuit Ruling on Misclassification of Independent Contractors Has Major Ramifications for Employers

In Alexander v. FedEx Ground Package System, Inc., 2014 U.S. App. LEXIS 16585 (9th Cir. Aug. 27, 2014), the Ninth Circuit Court of Appeals held that former Federal Express drivers were employees rather than independent contractors pursuant to California’s right-to-control test. This important decision is likely to reach across all industries and will cause regulators and attorneys to closely examine independent contractor agreements to determine if the employer retains sufficient direction and control over the manner or means by which the work is to be performed. This case teaches that no matter how workers are labeled by the employer, the substance of the work relationship is what controls the classification status.

Are You Too Cozy With Your Independent Contractors?

January 1, 2015 is fast approaching, and with it, the first year the employer mandate applies to employers with 100 or more full-time employees (50 in 2016) – the “Play or Pay” rules. In preparation for this new law, employers should review the individuals they treat as independent contractors to be sure they can defend that classification if audited by the IRS. An employer with 90 full-time employees and 10 independent contractors may find itself subject to the employer mandate if those contractors are really common-law employees (as defined by the IRS).

Proposed "Independent Misclassification" Law

Government efforts aimed at cracking down on perceived independent-contractor misclassification show no signs of slowing down as 2014 begins. On November 12, 2013, the “Payroll Fraud Prevention Act of 2013” (PFPA) was introduced in the U.S. Senate. According to one of the bill’s cosponsors, the bill is needed to reduce “intentional misclassification” which amounted to “payroll fraud.” The bill would make it a freestanding violation of the federal Fair Labor Standards Act (FLSA) to wrongly classify an employee as a non-employee.

Misclassification of Employees as Independent Contractors Will Remain a Top Priority Under New U.S. Secretary of Labor

The new head of the U.S. Department of Labor (DOL) will emphasize independent contractor misclassification as a top priority.

IRS Worker Classification Audits—Risks and Relief Options

The battle between the Internal Revenue Service (IRS) and taxpayers continues over independent contractor treatment. The Wall Street Journal recently reported that the IRS has been making its rounds to small businesses, checking in to see if they have classified their workers correctly.

Independent Contractor Challenges Aren't Going Away

For at least three years now, the U.S. Labor Department and the U.S. Internal Revenue Service (along with a host of analogous state and local agencies) have been on the alert for instances in which workers are erroneously considered to be independent contractors rather than employees. The popular euphemism for these situations is "misclassification" (although this term is also used to describe the different problem of incorrectly treating employees as being exempt from minimum-wage and/or overtime requirements).

Federal Court Finds Owner-Operators Independent Contractors Under FLSA

Executive Summary: A federal trial court in New Jersey has dismissed a lawsuit brought under the federal Fair Labor Standards Act (FLSA) by a group of drivers against a trucking company, holding that the drivers are not employees but independent contractors. Luxama v. Ironbound Express, Inc. et al., Civil Action No. 2:11-cv-02224 (D.N.J. June 28, 2012).

Liability Beyond Your Workers' Compensation Coverage

True or False? Workers' compensation is the exclusive remedy for employees pursuing a recovery against their employer. The answer is of course false. The exclusive remedy doctrine provides that when an employee is injured within the course and scope of employment, the employer's liability is limited to benefits payable under the state's workers' compensation statutes; mainly lost wages and medical benefits.

Independent Contractor Or Employee?

A perennial issue for businesses both in and out of the healthcare industry is the classification of individuals as independent contractors or employees. In an effort to save money in a tight economy and limit liability, many businesses attempt to use independent contractors to serve functions typically served by employees. Classifying someone as an independent contractor can save money on federal and state taxes, and it often means the business does not have to pay minimum wage or overtime to the individual.

Florida Judge Issues Significant Victory for Cable Installation Company in Independent Contractor Status Case

On March 29, 2012, a federal district judge in Florida issued an order granting summary judgment in favor of a cable installation company, finding that its technician installers are independent contractors and not employees. Scantland v. Jeffry Knight, Inc., No. 8:09-CV-1985-T-17TBM, U.S. District Court for the Middle District of Florida (March 29, 2012).

Employee Or Independent Contractor: One Way Of Thinking It Through

Deciding whether an individual is an employee or independent contractor is becoming an ever more important question. Employers should carefully scrutinize each and every independent contractor relationship which exists within the business before the Labor Department, the IRS, or a state agency does it for you.

DOL/IRS Collaboration Memo Makes For Interesting Reading

We wrote previously about the announcement of a cooperative alliance between the U.S. Labor Department and the U.S. Internal Revenue Service aimed at ending what the Secretary of Labor called "the business practice of misclassifying employees [as independent contractors] in order to avoid providing employment protections.

Employers Get Misclassification Tax Relief

The Internal Revenue Service (IRS) announced a new voluntary correction program to allow employers to reclassify workers who are improperly classified as independent contractors as employees for employment tax purposes. The Voluntary Classification Settlement Program (VCSP), announced September 21, 2011 in IRS Announcement 2011-64, permits employers to voluntarily reclassify workers for future tax periods with limited federal employment tax liability for past non-employee treatment. The VCSP is similar to the current Classification Settlement Program which allows employers under examination to resolve classification issues discovered by an examining agent with reduced federal employment tax consequences. The VCSP, however, is available to employers outside of an IRS examination. In general, the program allows employers to eliminate years of past employment tax liabilities for “pennies on the dollar”: an amount equaling just over one percent of the wages paid to the reclassified workers for the past year. To participate in the VCSP, an employer must meet certain eligibility requirements, apply to participate in the VCSP and enter into a closing agreement with the IRS.

Federal/State Cooperation on Independent Contractor Issue

It does not seem very often that any headline that involves government can properly use cooperation these days, but yesterday's story on NPR, Labor Dept. Expands Enforcement Of Wage Violations, indicates that the Department of Labor is signing agreements with various state agencies to share information that will allow both to go after companies which "mis-classify" individuals as independent contractors.

Government Agencies Are Going After Employers Who Wrongly Classify Employees As Independent Contractors

Today, National Public Radio (NPR) reported that the United States Department of Labor (DoL) is signing agreements with state agencies to share information regarding employers who have erroneously categorized employees as independent contractors. The DoL is also sharing this information with the Internal Revenue Service (IRS). As I noted in my August 15, 2011 Blog, wrongly classifying employees can result in significant penalties and costs to employers.

Are Your Independent Contractors Really Independent Contractors?

Employers that hire independent contractors must be extra cautious to ensure that these workers are classified correctly, because federal and state governments have signaled their intent to more seriously investigate misclassification issues. Employers that run afoul of the relevant statutes and regulations will face regulatory fines, back tax implications, wage and hour claims, workers' compensation issues and a host of other problems.

Misclassifications Matter.

As businesses look for ways to save money without lowering productivity, the benefits of hiring an independent contractor can be appealing for several reasons. Businesses who hire the services of properly classified independent contractors avoid many of the monetary responsibilities that attach to hiring employees: worker's compensation insurance, employment tax, and wage withholding responsibilities, amongst others.

Court Designates Sales Managers as “Employees” Because Company Controls Distribution of Sales Leads.

A group of insurance “sales leaders” who filed for overtime wages under the Fair Labor Standards Act (FLSA) have been deemed by the 5th U.S. Circuit Court of Appeals to be employees rather than independent contractors, and therefore eligible for overtime pay. Hopkins v. Cornerstone America, No. 07-10952 (5th Cir. October 13, 2008). The court based its decision on the economic realities of the situation, and determined that the managers were economically dependent upon the company for which they worked, instead of being in business for themselves.

Courier Found To Be Independent Contractor.

Weighing in on the ongoing controversy regarding the proper classification of workers, the federal court here held that a driver working for a courier service was an independent contractor, not an employee, and thus, not entitled to protection under Title VII, the NJLAD, the Fair Labor Standards Act and the State Wage and Hour laws.
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