Blog Posts: Worker Classification
The United States Department of Labor (DOL) appears to be reviving the “Right to Know” initiative first proposed in 2010. This initiative is aimed at reducing worker misclassification by requiring employers to reveal more information about how they classify employees. The DOL recently announced its intention to collect information about “employers' experiences and workers' knowledge of basic employment laws and rules so as to better understand employees' experience with worker misclassification.” The DOL may ultimately use this information in crafting and implementing a new Right-to-Know rule.
A company that deliberately misclassified employees as independent contractors to avoid paying minimum wage and overtime recently was ordered to pay over $570,000 in damages for the misclassification.
The U.S. Supreme Court is currently deciding a case on the question of whether pharmaceutical sales reps are exempt from the requirements of the Fair Labor Standards Act (FLSA) for overtime pay. In Susan Schaefer-LaRose v. Eli Lilly & Co., the Seventh Circuit ruled on the same question, approaching it from a different angle.
The U.S. Supreme Court recently heard oral arguments in a case involving overtime pay for pharmaceutical sales representatives (PSRs). Under the Fair Labor Standards Act (FLSA), outside sales representatives are exempt and are thus not entitled to overtime pay. The question the Court is considering is whether PSRs qualify for that outside-sales exemption — specifically, whether they are engaged in making sales.
The Department of Labor reached an agreement with Wal-Mart – and issued a stern warning to other companies -- after finding that Wal-Mart violated the overtime provisions of the Fair Labor Standards Act (FLSA) by misclassifying more than 4,500 employees as exempt from overtime pay.
With cell phones, smartphones, tweeting and texting, it's easy to remain connected to work 24/7. While employers and workers may appreciate the flexibility this connectivity provides for travel and off-site work, the constant call of mobile devices can sometime blur the line between work time and personal time. The situation creates a challenge for employers who must comply with wage-and-hour laws.
The U.S. Department of Labor, the Internal Revenue Service and labor agencies in 11 states have either signed or agreed to sign memoranda of understanding that will enable the agencies to share information and coordinate law-enforcement efforts against businesses that misclassify employees as independent contractors. The state agencies include those in Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington.
With profits in many industries still lagging, some companies are looking for ways to lower their payroll expenses. Some try to save on employment taxes by classifying workers as "independent contractors" or "consultants" rather than employees, while others try to save on overtime by classifying workers as "exempt" rather than "non-exempt."