2014 will not be the year in which employers find relief from continuing enforcement efforts by the federal and state governments to target alleged misclassification of employees for wage payment purposes – far from it.
In 2011, the United States Department of Labor (“U.S. DOL”) launched a Misclassification Initiative in order to combat the misclassification of employees as independent contractors, thereby enabling employers to avoid minimum wage and overtime obligations imposed by law. On November 18, 2013, New York State became the 15th state to enter into a memorandum of understanding with the U.S. DOL to assist in these enforcement efforts.
Over the past two years, the U.S. DOL has, through partnerships with state agencies, collected over $18 million in back wages for more than 19,000 workers in cases involving misclassification under the federal Fair Labor Standards Act.
In light of this new partnership, New York employers should expect heightened scrutiny from both federal and state agencies and aggressive enforcement of employee classification laws and regulations. In New York, the classification of workers as independent contractors is a highly fact-intensive analysis. Given this new enforcement partnership, employers would be well-advised to analyze independent contractor designations to ensure appropriate classification and seek legal advice in cases of uncertainty.