Following up on last week’s post about recent legislative efforts to prevent misclassification of employees as independent contractors, employers should be aware that the U.S. Department of Labor has stepped up efforts to enforce the issue in conjunction with the IRS’s plan to audit employment tax payments at 6,000 randomly selected companies over a three-year period. The initiative is designed to address a perceived tax shortfall in the collection of employment taxes due primarily to misclassification of employees as independent contractors. The IRS provides some guidance on classifying independent contractors online at: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
Additionally, the Labor Department has added 250 new inspectors (a 1/3 staff increase) as part of a broader crackdown on companies that misclassify workers as “exempt” from FLSA wage and hour laws like overtime and minimum wage. At the same time, plaintiffs lawyers are targeting companies in class actions on a range of wage and hour issues including worker misclassification, overtime and minimum wage, rest periods, and off-the-clock (the blurring of work time and personal time).
We can’t overemphasize the importance of properly classifying employees!