2. Ensuring those regarded as “independent
contractors” are not employees, again, under recent federal standards –
Last summer the Department of
Labor (DOL) issued a new interpretation of when a worker is an independent
contractor rather than an employee for purposes of wage and hour requirements
under the Fair Labor Standards Act (FLSA).
According to the new interpretation, the key question is whether the
worker is economically dependent on the employer or in business for him or
herself, and can be determined by considering several factors. The DOL boldly stated that under its new
analysis, “most workers will be considered employees rather than independent
contractors.”
Workers that might be reclassified
under this interpretation as employees rather than independent contractors
could include subcontractors, salespeople, drivers, cleaners, nurses and
caretakers, etc. Companies that use
these types of workers risk being held liable for tracking hours and paying
minimum wage and overtime under the law.
Additionally, the DOL has signed an agreement with the Minnesota
Department of Labor and Industry to share information and to coordinate
investigations and enforcement with regard to the misclassification of workers
as independent contractors. Unwary companies
could find themselves taken by surprise with liability under a number of laws
for their assumed “independent contractors” when the DOL defines these workers as
employees under its new stringent standard.
Given the DOL’s war on independent
contractors, once again an audit of these relationships is in order.
