The Labor Department’s New Independent Contractor Misclassification Web Page: While It Is Likely To Confound Viewers, It May Prompt Workers to File Complaints and Businesses to Enhance Their IC Compliance

The U.S. Department of Labor earlier today reissued its resources on independent contractor misclassification and grouped them together with resources from other federal and state agencies on the subject. This appears to be the Labor Department’s effort to create a type of one-stop shopping page for government materials on independent contractors.

But there is nothing new here for those seeking information on the subject. Indeed, some of the materials date back over 15 years and other resources are likely to confound and confuse more than elucidate the public on IC misclassification.  The resources include  Labor Department documents with conflicting definitions of independent contractor status as well as a 175-page comparison of unemployment laws that devotes only 4 pages to IC status and a 195-page unemployment study from the year 2000.

In effect, this new website is not a whole lot different than the first few pages of a google search for independent contractors, supplemented with some out of date materials.

The website that the Labor Department used to maintain on the subject was www.dol.gov/misclassifiction.  That website now redirects a search to the new web page at www.dol.gov/featured/misclassification.

What the New Web Page Contains and Why It Confounds

The new web page lists seven different types of resources:

– 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

– Resources for State and Federal Governments

The centerpieces of the Labor Department’s new web page are the two links with new graphics. One is called the “Myths about Misclassification,” which we commented about last August in our post, “Misclassification Mythbusters: The Labor Department’s Latest Effort to Crack Down on Independent Contractor Misclassification.” The second is an abbreviated version of the “Myths” web page.

As we noted in our blog post, the “Myths” document when issued was not an accurate restatement of the law.  The Labor Department then took down the web page and re-posted it shortly thereafter with changes that fixed some of the erroneous statements but, even with its revisions, still perpetuated the Labor Department’s mistaken position that the test for IC status under the FLSA is a one-factor test: economic dependence.  This view is in contrast to court cases that hold that no one factor is determinative of IC status, although greater weight is given to the factor whether an employee is economically dependent on the party receiving his/her services.

Perhaps the most confounding statement to workers and businesses in the Labor Department’s materials though is its acknowledgment that “Even if you are a legitimate independent contractor under one law, you may still be an employee under other laws.” Even a sophisticated reader would wonder what an independent contractor is.

What Is the Likely Impact of the New Web Page?

Exactly what the Labor Department hopes for: more recognition by workers that they might possibly be misclassified, which may in turn lead to more reporting and an increased number of complaints and enforcement actions at the state and federal level and more class actions alleging IC misclassification.

If you are reading this blog post and are a business that uses ICs to deliver services or to supplement your workforce, then the Labor Department’s new web page may well serve your interests also.

Businesses that wish to avoid becoming a target for IC misclassification cases should take note that it is not too late to enhance your level of IC compliance. Many companies have chosen IC Diagnostics™ to assist them in determining which of several alternative strategies to undertake in minimizing misclassification exposure. The most commonly used alternative is restructuring, re-documenting, and re-implementing IC relationships.

Many IC agreements designed to withstand a legal challenge may also benefit from a re-evaluation and fine-tuning. The language in some companies’ own IC agreements have even been used against them in some cases to prove that workers classified as ICs have been misclassified and should have been treated as employees.

Some companies have even used this process to better defend against current regulatory proceedings and class action lawsuits. Companies that have been targeted and may have to pay unpaid wages, back taxes, or unemployment or workers’ compensation premiums, as well as  businesses that are considering settlement of IC misclassification lawsuits, should not presume they are somehow precluded from maintaining an IC business model or using ICs to augment their workforce once the case is resolved. Instead, IC Diagnostics™ may provide them with a form of restructuring and re-documentation that meaningfully enhances compliance with IC laws.

Written by Richard Reibstein

 

Published by Richard Reibstein, Lisa Petkun and Andrew Rudolph.

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