Employers Beware: Federal and State Labor Departments Join Together to Fight Employee Misclassification

This is from Goldberg Segalla:

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.  

Employee misclassification has far-reaching financial implications because it prevents workers from receiving many critical benefits and protections to which they are entitled, such as overtime pay, family and medical leave, minimum wage pay, and unemployment insurance. In addition, on a national level, misclassification generates substantial losses to the Treasury, Social Security, and Medicare, as well as state unemployment insurance and workers’ compensation funds.  

As a result, the U.S. Department of Labor has embarked upon a “Misclassification Initiative” under which it has signed a Memorandum of Understanding (MOU) with the Internal Revenue Service and with numerous state Departments of Labor. These include Alabama, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah, and Washington. ...