Consistent readers of the blog will no doubt know of my weaving in pop culture into blog posts. So it was with some good fortune that as I began to write this post, the song “Dog Days are Over” popped up on my iPhone speakers in typical Shuffle-mode fashion. Seems only appropriate as I pass along a quick update from my colleague, Jon Orleans, about the increase in audits that we’ve been seeking lately on misclassification issues.
It’s old news that the U.S. Department of Labor has stepped up enforcement of the rules distinguishing independent contractors from employees.
You probably know that the more control you exercise over a worker, the more likely it is that the person will be considered your employee for purposes of the Fair Labor Standards Act (governing such issues as overtime pay), employee benefit plans, and tax laws. Misclassification can have severe consequences.
Word has been circulating among our colleagues in the Law Firm Alliance – a nationwide law firm network of which Pullman & Comley is a member – that at an American Bar Association Labor & Employment Section meeting late last year, a representative of the Department of Labor identified the following industries as targets for worker misclassification investigations:
- property management
- security guards
- cleaning companies
- nail salons
And at a meeting last year of the Labor & Employment Section of the Connecticut Bar Association, we were told by a U.S. Department of Labor official that in our geographic area, the construction industry in general is considered a high priority target. Moreover, the official said, the Department is aggressively seeking liquidated (i.e., doubled) damages, and penalties, when workers are found to have been misclassified.
While its little unscientific, we’ve also been seeing more audits among our clients — and it just so happens that they seem to be falling disproportionately among restaurants and day spas.
Forewarned is forearmed. If you’ve avoided reviewing your classification policies and practices and been fortuante to avoid government scrutiny, your luck may run out soon. The time is now to get to it.