Last month it was announced that Levi Strauss & Co has agreed to pay $1 million in back wages to about 600 employees after a government investigation found that the company had misclassified employees, deeming them exempt from overtime.
The settlement is one of many in a recent deluge of employee misclassification lawsuits and investigations under the Fair Labor Standards Act, and with new legislation on the way, it’s only going to continue.
Additionally, the Payroll Fraud Prevention Act (S. 770) is currently in Senate committee. The bill seeks to amend the Fair Labor Standards Act to clarify employee classification, mandate investigation and reporting by the Department of Labor, and to establish administrative penalties of up to $5000 per worker.
Even without S. 770, misclassification can already lead to FLSA penalties, back wages for 2 to 3 years, state penalties, back taxes, and an administrative nightmare trying to handle pensions and benefits.
With renewed attention on the issue of misclassification and the attractiveness of hiring independent contractors during trying economic times, it might be a good idea to take the time to reacquaint yourself and your management team with the rules governing independent contractors.
The fact is that, in hiring independent contractors, companies are opening themselves up to incredible risk, and staying on top of the rules that govern the distinction between employees and non-employees is the only effective prevention.
Related Resources:
- Pennsylvania Legislature Implements New Measures to Curb Independent Contractor Misclassification by Construction Firm (FindLaw)
- An Employee by Any Other Name: The Thorny Side of Misclassification (FindLaw)
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Civil Rights
Block on Trump’s Asylum Ban Upheld by Supreme Court
Criminal
Judges Can Release Secret Grand Jury Records
Politicians Can’t Block Voters on Facebook, Court Rules
