The Wage and Hour Division of the U.S. Department of Labor (DOL) has increased their efforts to reduce the practice of misclassifying employees. DOL has partnered with eleven states including Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, Washington and Utah to increase enforcement. The state partnerships stem from DOL’s so-called “Misclassification Initiative,” which NLA reported on earlier this year. The initiative produced an agreement between the Internal Revenue Service and DOL to help reduce the tax gap and improve compliance with federal labor laws and the state initiative takes this to the next level.
The recent state partnerships allow DOL to coordinate enforcement efforts with the state agencies responsible for labor oversight. DOL claims that law-abiding employers will now benefit from a level playing field, as state and federal regulators will ensure that employers pay the proper overtime compensation, insurance taxes, and workers’ compensation premiums.
DOL maintains that business models that attempt to change, obscure or eliminate the employment relationship are not inherently illegal, unless they are used to evade compliance with federal labor law. They further claim that the misclassification of employees as something else, such as independent contractors, presents a serious problem, because they contend that these employees often are denied access to critical benefits and protections.
The National Limousine Association will continue to report on developments of DOL’s Misclassification Initiative.