When it comes to misclassification, the DOL is known for detailed investigations and steep fines and penalties. But recently the agency tried a different approach.
As Ogletree Deakins reported, the agency just issued what it is describing as a “user-friendly webpage where workers, employers, and government agencies can find information and resources about misclassification of workers as independent contractors.
For employers that are struggling to get the distinction right — and avoid the feds’ ire — this is an invaluable tool. The new and up-to-date resource can be used for everything from a self-audit to a checklist to ensure all classifications would pass muster with the feds.
The site directs visitors to a portal titled “Where can I get more information.” That portal is broken down into the following eight major sections:
- 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 Government, and
- Other Resources/Information.
From there, each section brings users to a host of charts, legal info, outlines and other info on the section they selected. Example: the section Pay and Misclassification includes links to the following DOL resources:
- Myths About Misclassification
- Get the Facts on Misclassification Under the FLSA
- Know Your Rights Video: Employee v. Independent Contractor
- Employment Relationship Under the FLSA
- Elaws: Independent Contractors
- Am I an Employee: Employment Relationships Under the Fair Labor Standards Act
- Coverage Under the Fair Labor Standards Act
- Wage-Hour Division Administrator’s Interpreation, The Application of the Fair Labor Standards Act’s “Suffer or Permit” Standard in the Identification of Employees who are Misclassified as Independent Contractors
- WHD Press Releases About Employee Misclassification as Independent Contractors.
According to the DOL, employers should always use its “economic realities” test to determine a worker’s classification. This test is designed to determine whether:
- an employee is economically dependent on the employer, which would make him/her an employee, or
- the person is in business for himself or herself, which makes him/her an IC.
The economic realities test includes the following six factors that employers can use on a case-by-case basis to pinpoint the correct way to classify an individual:
- the extent to which the work performed is an integral part of the employer’s business
- the worker’s opportunity for profit or loss depending on his or her managerial skill
- the extent of the relative investments of the employer and the worker
- whether the work performed requires special skills and initiative
- the permanency of the relationship, and
- the degree of control exercised or retained by the employer.