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One Employer's Strategy Against the DOL's Crackdown on Employee Misclassification
Imagine that your client, a small business owner, alarmed by a recent visit from the United States Department of Labor (DOL), calls you. The DOL's Wage and Hour investigator has informed your client that he owes the government millions of dollars for violating the Fair Labor Standards Act (FLSA) and misclassifying as independent contractors hundreds of individuals that the investigator believes are employees. Moreover, the investigator states that the client will have to treat his contractors as employees going forward, thus forcing him to change his business practices drastically.
DOL Directive
There is no doubt that a significant number of employers and their counsel will be faced with this very scenario ' otherwise known as the “so-called misclassification label.” The reason for this is that the Obama Administration has made the enforcement of employee misclassification cases its “Strategic Goal #1 in 2011.” U.S. Department of Labor Strategic Plan Fiscal Years 2011-2016. The DOL devoted a whopping $12 million of its FY 2011 budget to pursuing misclassification enforcement actions, alone. U.S. Dep't of Labor, Fyi 2011 Budget In Brief 5 (2010). Another $13 million of that budget has been delegated to competitive misclassification training grants to the States and to the DOL's Solicitor of Labor for the purpose of litigating misclassification cases. U.S. Department of Labor Strategic Plan Fiscal Years 2011-2016. Such training appears to be needed, given the low percentage of misclassification enforcement actions pursued in prior years. As a result of the significant financial resources and high priority that the DOL has placed on these investigations, employers must be ready to defend themselves when the DOL comes knocking. How would you advise your client?
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