February 3, 2015
The US Department of Labor’s Wage and Hour Division continues its focus on independent contractor misclassification. This week and last week it announced several companies are being required to pay hundreds of thousands in back pay for IC misclassification and overtime violations.
Some employees misclassified as independent contractors
Date: January 29, 2015
U.S. Department of Labor
Wage and Hour Division
Release Number: 14-2338-DAL
NEDERLAND, Texas — Specialty Painting & Wall Covering Inc. and M & S Enterprise have paid 22 painters and sheetrock installers $108,783 in overtime back wages after an investigation by the U.S. Department of Labor’s Wage and Hour Division. The investigation revealed violations of the Fair Labor Standards Act’s overtime and record-keeping provisions and found that workers at M & S Enterprise were misclassified as independent contractors.
The division’s Houston District Office investigated both construction companies that are jointly owned and operated and employ workers who perform painting, sheetrock installation and finishing projects. Workers of Specialty Painting & Wall Covering were paid for up to 40 hours per week with a check from that company. When workers at Specialty worked more than 40 hours in a week, they were paid for the overtime hours with a separate check from M & S Enterprise at their straight-time rate with no taxes withheld. Workers of M & S Enterprise were misclassified as independent contractors and were paid straight time for all hours worked, including overtime hours.
By Scott Braddock
January 23, 2015
A report from a bipartisan panel of Texas lawmakers says companies that pretend their employees are independent subcontractors are undermining free markets and encouraging illegal immigration, among other serious problems. The practice of worker misclassification happens when an employer intentionally skirts the law by paying workers as independent subcontractors when they meet the legal definition of employees and should be paid as such.
Preventing workers from being paid as employees denies them basic protections and costs taxpayers millions each year because employers are avoiding payroll taxes on that labor. Employers who follow the law are investing in a sustainable workforce, which is undermined by worker misclassification. Many of those ethical employers have urged lawmakers to do more to contain what they’ve called “a cancer” in the heart of the construction industry.
So, the Texas House Business and Industry Committee this past year took an in-depth look at the issue, including testimony from construction industry leaders, labor advocates and others who are united in combating misclassification.
WHD NEWS Brief: 1/20/2015
Release Number: 15-0062-NAT
Description: Officials from the U.S. Department of Labor and the Wisconsin Department of Workforce Development signed a memorandum of understanding with the goal of protecting the rights of employees by preventing their misclassification as independent contractors or other nonemployee statuses. Under the agreement both agencies will share information and coordinate law enforcement.
WASHINGTON — Officials from the U.S. Department of Labor and the Florida Department of Revenue today signed a memorandum of understanding with the goal of protecting the rights of employees by preventing their misclassification as independent contractors or other nonemployee statuses. Under the agreement, both agencies will share information and coordinate law enforcement. The MOU represents a new effort on the part of the agencies to work together to protect the rights of employees and level the playing field for responsible employers by reducing the practice of misclassification. The Florida Department of Revenue is the latest state agency to partner with the Labor Department.
In Fiscal Year 2013, WHD investigations resulted in more than $83,051,159 in back wages for more than 108,050 workers in industries, such as janitorial, food, construction, day care, hospitality and garment. WHD regularly finds large concentrations of misclassified workers in low-wage industries.
“Misclassification deprives workers of rightfully-earned wages and undercuts law-abiding businesses,” said Dr. David Weil, administrator of the Wage and Hour Division. “This memorandum of understanding sends a clear message that we are standing together with the state of Florida to protect workers and responsible employers and ensure everyone has the opportunity to succeed.”
“Working with the states is an important tool in ending misclassification,” said Wayne Kotowski, the Wage and Hour Division’s regional administrator for the southeast. “These collaborations allow us to better coordinate compliance with both federal and state laws alike.”
BY NICHOLAS NEHAMAS
01/13/2015 7:39 PM
Taxpayers were cheated.
Workers were swindled out of a fair shake.
Law-abiding businesses were forced to cut corners or go belly up.
A year-long investigation by Miami Herald and McClatchy Newspapers published in September found all this and more in Florida’s construction industry during the recession.
Publicly available documents and interviews with workers around Florida showed that contractors broke state law and cheated on their taxes in order to get work on the federally financed projects that were the lifeblood of the building industry between 2009 and 2013.
Now the U.S. Department of Labor has announced an agreement with the state Department of Revenue to crack down on the accounting trick that bad actors use to evade taxes and cheat their employees.
The problem, known as “worker misclassification,” happens when companies treat their workers as independent contractors instead of permanent employees. The companies don’t withhold income tax or file payroll taxes on those workers. They don’t pay unemployment taxes.
By WorkersCompensation.com
Providence, RI (WorkersCompensation.com) – A six-agency task force established to protect both workers’ rights and law-abiding businesses that classify their employees properly announced today that it has set up an anonymous telephone tip line for allegations of misclassification.
Staffed by the Rhode Island Division of Taxation, the tip line number is 401-574-8477. Also, the task force is currently building a website to allow people to post tips online.
The chairman of the Joint Task Force on the Underground Economy and Employee Misclassification, DLT Director Charles J. Fogarty, and RI Tax Administrator David M. Sullivan also announced that their agencies have been meeting regularly to share information since the task force came into being in June with the enactment of the Fiscal Year 2015 State Budget. The panel’s purpose is to:
“One of our major goals is educating, not violating, Rhode Island companies that might unknowingly be misclassifying their workers,” Fogarty said. “At the same time, however, fighting misclassification is an important strategy to promoting shared prosperity in our state
Syracuse, N.Y. – A Syracuse area contractor has been ordered to pay $380,000 in back wages to more than 300 drywall installers that federal officials said were misclassified as independent contractors.
The U.S. Department of Labor sued General Interior Systems Inc., of Clay, in U.S. District Court in Syracuse in 2008, alleging the company misclassified employees to avoid paying overtime and other benefits.
GIS and its owner and president, Jeffrey Mento, admitted to the misclassification and agreed to pay back wages in a settlement with the DOL in August last year.
DOL spokesman Ted Fitzgerald said the department was making the settlement public now to highlight the issue of misclassification and to seek the public’s help in finding the employees who are owed the back wages. Some of the 300 workers have moved and left no forwarding address, he said.
Wednesday, November 19, 2014
By K. W. Mitchell
In combating employee misclassification, the Labor Department is taking strategic misclassification enforcement to the next level by placing greater priority on measures that are tactical and swift, a department official said.
“To carry out our job, we must be prudent and strategic in our enforcement actions,” said David Weil, administrator of the Labor Department’s Wage and Hour Division.
“We need to create ripple effects that impact compliance far beyond the workplaces where we physically conduct investigations, or the organizations to which we provide outreach directly,” Weil said Oct. 31 in a blog post.
Additionally, the division needs to be persistent in discovering ways to “make our investigation of one employer resonate throughout that particular sector and influence the behaviors of employers across that entire industry, to promote compliance across networks of business organizations,” Weil said.
BY BOB SANDERS
Published: November 17, 2014
New Hampshire last week became the 15th state to join the federal Labor Department’s misclassification initiative; Massachusetts followed suit on Monday.
“Misclassification of workers steals benefits and protections from employees and allows unfair advantages to businesses that do it,” said New Hampshire Labor Commissioner James W. Craig. “This agreement will help us grow our state and regional economy by leveling the playing field for honest and law-abiding employers.”
New Hampshire has grappled with the murky world of independent contractor classification for decades. Definitions change depending on the law involved, and enforcement is uneven.
The state Department of Employment Security, for instance, has found misclassification in nearly a quarter of the audits it conducts. But the state Department of Labor only has fined a fraction of those fined by the Employment Security and has drastically reduced most of the fines imposed.