FLSA is Speeding Towards Compliance....A Review of 1099 Classification
Employers have a lot on their plates. There are a myriad of compliance issues that must be routinely addressed in order to ensure smooth operations. Across the nation the Department of Labor is actively pursuing employers found in violation of Fair Labor Standards Act (FLSA).
The Dept. of Labor has been vocal regarding their dedication to stepping up compliance enforcement. At the Employment Law and Legislative conference held in Washington, DC, WHD Regional Administrator Ruben Rosalez reported that over one hundred additional WHD investigators were recently hired. That is reflected in the increasing settlements. In 2014 alone, more than $79 million in back wages for more than 109,000 workers. (Dol.gov). Judgments in favor of misclassified employees are on the rise and have given pause to employers everywhere, in taking steps to ensure they are complying with state and federal wage laws.
Recently, Uber was fined for misclassifying employees as independent contractors and as part of the judgment against them paid fines with interest along with a judgment for the employee. The California Labor Commissions defined Uber as “involved in every aspect of the operation.”
Uber was not the only company recently found to be in violation of FLSA labor rules regarding employee classification. An $11 million dollar settlement was awarded to a trucking firm, Shippers Transport Express, Inc. also for misclassifying drivers.
The Top 3 Best Questions to Ask For Independent Contractor Classification
Compliance is not simple, but good faith efforts must be made to protect employers and workforce rights. Here are a few questions to ask yourself about any of your independent contractors:
- Is the work performed an integral part of the employer’s business?
- Does the worker’s managerial skills affect opportunity?
- Does the worker invest in facilities and equipment?
If you answered yes to one of these questions, its possible that an employee may be misclassified and further investigation is required. For more information, check out another article written by my colleague that may provide even more clarification for employers in Virginia.