DOL Unveils New Online Misclassification Website

DOL Unveils New Online Misclassification Website

Near the end of 2016, the Department of Labor (DOL) launched a new webpage regarding independent contractor misclassification. While many of the resources on the site are ones you may have seen before, what makes this updated site useful is that it houses information from various state and federal agencies all in one location. It’s a “one-stop shop” of sorts for any and all information regarding independent contractor misclassification.

Beside links to state resources, there is also information from OSHA, MSHA, the IRS, and more. The site includes materials for both employers and employees, prompting many to believe that one of the goals of the site is to increase the number of employee complaints. But it also serves as a useful tool for employers. In recent years, the Department of Labor (DOL) has stepped up enforcement efforts on employers who misclassify workers as independent contractors. Misclassification penalties can be steep and include back pay, back taxes, and fines.

According to the DOL site, “workers misclassified as independent contractors may miss out on:

  • minimum wage and overtime pay
  • protections from anti-discrimination and anti-retaliation laws
  • workers' compensation if injured on the job
  • unemployment insurance
  • health and safety protections on the job, and
  • employer-sponsored benefits

Misclassification could double the Social Security tax due from workers.”

The page also notes that businesses may gain an unfair competitive advantage by lowering their personnel costs since they may not be offering benefits or paying all wages, such as overtime.

The site breaks down the type of information into eight categories:

  • Pay and Misclassification
  • Health and Safety Concerns on the Job
  • Unemployment Insurance and Misclassification
  • Anti-Retaliation/Anti-Discrimination Rights for Workers
  • Federal Taxes and Misclassification
  • Health Care and Retirement Benefits – Information on Employer-Sponsored Benefit Plans
  • Resources for State and Federal Governments
  • Other Resources/Information

Under each category there is a drop-down menu of additional resources. For example, under Pay and Misclassification, there are nine additional bullet points, including “Myths About Misclassification,” “Know Your Rights Video: Employee vs. Independent Contractor,” “Coverage Under the Fair Labor Standards Act,” and more.

Under Health Care and Retirement Benefits – Information on Employer-Sponsored Plans, there are resources that link to the applicable federal laws for both employees and employers.

Regarding Health and Safety Concerns on the Job, there is a link specifically for temporary workers, “Protecting Temporary Workers Web Pages” that links directly to OSHA and more information about their Temporary Worker Initiative.

It’s important to protect you and your staffing company against misclassification by establishing and following a set of best practices to ensure your classification standards are consistent and that you have adequate documentation to support that classification. The resources available on this site can help you achieve this goal.

For example, the IRS considers the degree of control and independence, which tends to fall into three categories:

  1. Behavioral — This includes whether or not the company can control not only what the worker does, but how he or she does it.
  2. Financial — This looks at who controls the business aspect of the worker’s job, meaning how he or she is paid, what supplies or tools are provided and if expenses are reimbursed.
  3. Type of Relationship — This includes whether there are written contracts or any benefits provided to the worker, including insurance, vacation or retirement plans. It also looks at the duration of the relationship and if the work is critical to running the business.

Under the Fair Labor Standards Act, the factors the DOL considers when determining if someone is an employee or independent contractor are slightly different. They include “the extent to which the work performed is an integral part of the employer’s business,” and “the permanency of the workers’ relationship with the employer.” More detail can be found under Pay and Misclassification, “Am I an Employee? Employment Relationship under the Fair Labor Standards Act.”

Reviewing the information on this site can help ensure you are making the correct determination for employees vs. independent contractors, as well as have a better understanding of common misperceptions employees may have about the classification.

You can find the page at: https://www.dol.gov/featured/misclassification/

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