Total Articles: 76
XpertHR • September 13, 2018
Open enrollment season presents unique challenges for employers and can be a hectic time for HR and benefits professionals.
Fisher Phillips • August 08, 2018
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.
Jackson Lewis P.C. • August 06, 2018
In its first substantive guidance on independent contractors, the Trump Administration has targeted misclassification in the healthcare industry.
Littler Mendelson, P.C. • July 18, 2018
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.
About eight in 10 independent contractors prefer their work arrangement over a more traditional job arrangement. By contrast, only about four in 10 temporary help agency workers and on-call workers prefer their work arrangement, according to a new survey from the US Department of Labor's Bureau of Labor Statistics (BLS).
Fisher Phillips • May 07, 2018
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.
Fisher Phillips • May 06, 2018
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.
Fisher Phillips • March 25, 2018
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.
Fisher Phillips • March 09, 2018
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.
Littler Mendelson, P.C. • February 14, 2018
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.
XpertHR • February 14, 2018
A restaurant delivery driver for the online food-ordering company Grubhub was properly classified as an independent contractor under California law, a federal court has ruled.
XpertHR • November 14, 2017
Legislation that would limit the circumstances under which an employer is considered a "joint employer" under federal employment laws has passed the US House of Representatives.
Fisher Phillips • November 08, 2017
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.
Fisher Phillips • November 02, 2017
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?
Fisher Phillips • October 27, 2017
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.
Fisher Phillips • September 15, 2017
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.
Fisher Phillips • September 13, 2017
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.
Fisher Phillips • August 14, 2017
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.
Littler Mendelson, P.C. • July 21, 2017
He insists that he cannot provide a hair sample for testing purposes.
Littler Mendelson, P.C. • July 14, 2017
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.
Fisher Phillips • July 07, 2017
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.
Fisher Phillips • June 19, 2017
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.”
The US Department of Labor (DOL) has withdrawn two administrator interpretations issued during the Obama administration, which had taken employee-friendly stances regarding joint employment and independent contractors.
Goldberg Segalla LLP • June 13, 2017
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.
Fisher Phillips • June 11, 2017
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.
Franczek Radelet P.C • June 11, 2017
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.
Phelps Dunbar LLP • June 08, 2017
Today the United States Department of Labor (“DOL”) withdrew two Administrator Interpretations (“AI”). In particular, the DOL rescinded the AI issued on July 15, 2015, which targeted employer misclassification of employees as independent contractors under the Fair Labor Standards Act (“FLSA”) and emphasized that the pertinent inquiry in determining whether an individual is an “employee” versus an “independent contractor” is whether the individual is “economically dependent” on the employer such that he is an employee. The July 2015 AI set forth a six-factor “economic realities” test to guide employers in determining whether an individual is “economically dependent” on the employer and stressed that the six-factor test should be applied “broadly.” A more detailed summary of the July 2015 AI can be accessed here.
Ogletree Deakins • June 08, 2017
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.
Fisher Phillips • May 18, 2017
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.
Fisher Phillips • April 14, 2017
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.
Fisher Phillips • April 14, 2017
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…
Fisher Phillips • March 21, 2017
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.
Fisher Phillips • March 07, 2017
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.
Ogletree Deakins • December 20, 2016
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.
Fisher Phillips • October 05, 2016
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.”
XpertHR • September 13, 2016
Three states - Pennsylvania, North Carolina and Nebraska - recently teamed up with the US Department of Labor (DOL) to prevent the misclassification of employees as independent contractors.
Fisher Phillips • July 18, 2016
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.
Fisher Phillips • April 28, 2016
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.
Franczek Radelet P.C • April 28, 2016
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.
Fisher Phillips • April 06, 2016
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.
XpertHR • February 12, 2016
The 5th Circuit Court of Appeals has ruled for the first time that Section 504 of the Rehabilitation Act authorizes employment discrimination lawsuits filed by independent contractors. The appellate court's ruling in Flynn v. Distinctive Home Care, Inc.is significant in its finding that the Rehabilitation Act offers broader protection than Title I of the Americans with Disabilities Act (ADA). The 5th Circuit covers Texas, Louisiana and Mississippi.
Jackson Lewis P.C. • September 28, 2015
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).
XpertHR • September 03, 2015
There’s been somewhat of a push and pull over the last few years for employers and HR professionals when it comes to staffing issues. On the one hand, many employers have been hesitant to add new staff since the bottom fell out of the economy in 2008, even despite signs of an upturn. On the other hand, with business starting to pick up existing staff members have a feeling of being overwhelmed that needs to be addressed.
Fisher Phillips • September 02, 2015
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.
Ogletree Deakins • September 01, 2015
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.
Schulte Roth & Zabel LLP • August 07, 2015
On July 15, 2015, the U.S. Department of Labor (DOL) issued Administrator’s Interpretation No. 2015-1 to address misclassification of independent contractors under the wage and hour requirements of the Fair Labor Standards Act (FLSA). Also on June 30, 2015, the DOL issued a proposed regulation amending the exemption tests for “white collar” employees under the FLSA. Both of these actions highlight the need for employers to re-examine their classifications of individuals as contractors or as exempt from overtime pay requirements.
Ogletree Deakins • July 28, 2015
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).
Jones Walker • July 17, 2015
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
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
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
Ogletree Deakins • July 17, 2015
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.
Fisher Phillips • June 18, 2015
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.
Fisher Phillips • March 06, 2015
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.
Fisher Phillips • February 03, 2015
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.
Ogletree Deakins • January 30, 2015
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.
Ogletree Deakins • November 03, 2014
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.
Goldberg Segalla LLP • October 10, 2014
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.
Goldberg Segalla LLP • September 26, 2014
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.
Fisher Phillips • May 07, 2014
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).
Fisher Phillips • February 13, 2014
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.
Ogletree Deakins • September 11, 2013
The new head of the U.S. Department of Labor (DOL) will emphasize independent contractor misclassification as a top priority.
Ogletree Deakins • May 23, 2013
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.
Schulte Roth & Zabel LLP • January 17, 2013
Employer misclassification of employees as independent contractors can be a costly mistake with many ramifications, including, but not limited to, the possibility of having to pay retroactive employment taxes with interest and penalties. In an Alert dated Nov. 23, 2011, we advised you of the Voluntary Classification Settlement Program (the “VCSP” or the “Program”), a program announced by the Internal Revenue Service (the “IRS”) which provides employers with the opportunity to voluntarily reclassify workers as employees with limited federal employment tax liability for past non-employee treatment. On Dec. 17, 2012, the IRS announced the expansion of the VCSP.
ManpowerGroup • October 23, 2012
Everything you need to know about Independent Contractors in one handy post.
Fisher Phillips • September 11, 2012
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).
FordHarrison LLP • July 05, 2012
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).
Fisher Phillips • July 02, 2012
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.
Fisher Phillips • May 07, 2012
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.
Ogletree Deakins • April 03, 2012
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).
Fisher Phillips • November 02, 2011
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.
Fisher Phillips • October 05, 2011
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.
Ogletree Deakins • September 30, 2011
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 â€œpennies on the dollarâ€: 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.
Ogletree Deakins • September 21, 2011
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.
Franczek Radelet P.C • September 20, 2011
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.
Fisher Phillips • August 30, 2010
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.
Fisher Phillips • July 07, 2010
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.
Ogletree Deakins • October 24, 2008
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.
Ogletree Deakins • June 09, 2008
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.