Wednesday, October 5, 2011

Watch out for new push in FLSA enforcement

September 22, 2011 by Tim Gould
employment-agreement
Heads up: The feds and a group of states are taking a tag-team approach to making sure employees are properly classified under the Fair Labor Standards Act.
The Department of Labor (DOL), Internal Revenue Service (IRS) and nine states are joining forces to crack down on companies that improperly classify workers as independent contractors.
The central concept is that state and federal agencies will now exchange information about companies in violation of the independent contractor rules.
That means an employer could be facing sanctions from both state and federal labor agencies — not to mention the tax implications of getting the IRS in on the act.
The states involved so far are Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington.
Other states can join the initiative. It’s expected New York will come aboard in the near future.
The key questions
The move is but the latest chapter in ongoing efforts to crack down on the use of independent contractor status as a means to avoid “providing employment protections,” in the words of a DOL press release.
So once again, it’s time for employers to check classification procedures to make sure they’re in line with state and federal law. 
John E. Thompson, writing on Fisher & Phillips Wage and Hour Laws blog, offers a list of critical questions to ask when considering a worker’s FLSA status:
  • Are the individual’s services an integral part of the organization’s activities?
  • Does the individual have any significant investment in facilities or equipment?
  • Does the individual have an opportunity for profit and loss in a business sense?
  • Does the individual exercise a businessperson’s initiative, judgment, or foresight?
  • Is the relationship is permanent or indefinite, rather than for a determinable time?
  • Does the individual have meaningful and predominant control over the work’s details?
  • How much control does the organization retain over the work’s details?
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