For the last few years, the "big thing" in employment
litigation has been the misclassification of non-exempt employees
as exempt under the Fair Labor Standards Act. As we discussed in a
prior article, the U.S. Department of Labor recently has put
employers on notice that they will be aggressively looking at
misclassification of individuals as independent contractors. The
U.S. DOL has taken the position that under the Fair Labor Standards
Act the definition of employee is broad and more individuals should
be classed as employees.
U.S. DOL is not the only party who can seek to correct the
misclassification of independent contractors. The plaintiffs'
bar can bring suit as well. This may well be the next big thing in
terms of trying to collect minimum wage and overtime payments to
people improperly classified as independent contractors. In
addition, the government has the incentive to bring lawsuits to
recover unpaid FICA and FUTA taxes as well as federal income taxes
which may not have been paid by independent contractors.
Our advice is for employers to review those individuals they
consider to be independent contractors. You and counsel may be able
to make changes to strengthen the independent contractor
relationship and make these individuals or groups more independent.
It is clearly an exercise whose time is now.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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