Earlier this month, I published a blog entry entitled “Are Independent Contractors on the endangered species list” which addressed the pitfalls of misclassifying workers as independent contractors instead of employees. The Wage and Hour Division of the Department of Labor issued a press release on August 18 entitled “Alabama trucking company misclassified workers as independent contractors”, with the subtitle “Employer to pay 63 employees nearly $113k in back wages and damages following Labor Department investigation”. The DOL found that Fitzhugh Contracting LLC, located in Gallion, Alabama, had 63 workers, classified as independent contractors, who were paid straight time for all hours worked, and did not receive time and a half for hours worked in excess of 40 hours per week. The DOL’s conclusion that these workers were misclassified as independent contractors, instead of employees, resulted in the 63 employees receiving $56,367 in back wages, plus $56,367 in liquidated damages. Fitzhugh Contracting also agreed to comply with the FLSA in the future.
Practice pointer. As evidenced by this investigation, misclassification of employees can get very expensive for employers. Had this case been initiated by an attorney, instead of the DOL, in addition to actual damages and liquidated damages, the employer would have also been facing paying for attorneys’ fees and court costs. I anticipate that there will be more of these press releases, as well as lawsuits, dealing with the misclassification of employees in Alabama and around the country. Now is the time for employers to evaluate how they classify their workers to ensure compliance with state and federal law.