When employees are misclassified as independent contractors, everyone – except for the company doing the misclassifying – loses. Workers are deprived of wage-and-hour protections, such as the minimum wage and overtime, and are denied access to programs such as unemployment insurance and workers’ compensation. Competing companies face an unfair competitive advantage that the misclassification creates. And the federal government and state governments lose billions in unpaid Social Security, unemployment insurance, and income taxes.
The Department of Labor recently announced its plan to survey workers about their employment experiences and gauge their knowledge about basic employment laws. Gathering this information will allow policymakers to learn whether workers understand their employment classification and the implications of their classification status.
The survey is critical, in part, because many speculate that it could be a prelude to “right-to-know” regulations. Pushed early during the Obama Administration, a right-to-know rule would update the recordkeeping requirements to enhance transparency and disclosure of worker classification. The rule would achieve this perhaps by requiring employers to provide written analysis to workers that justifies employment classification, and by requiring employers to maintain a copy of the analysis for potential inspection by the Department of Labor.
Regardless of the worker-classification survey’s purpose, the Department of Labor during the Obama Administration has recognized the rampant misclassification of workers. The survey is another step in the direction of curtailing misclassification. If you would like to have more information on this subject, contact Brad Smelser, a lawyer in our Consumer Fraud Section, at 800-898-2304 at Brad.Smelser@beasleyallen.com.
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