On November 18, 2013, New York State announced that it is teaming with the U.S. Department of Labor (U.S. DOL) to protect employees against misclassification as independent contractors or other nonemployee statuses. Officials for the U.S. DOL, the New York State Department of Labor (N.Y. DOL), and New York State Attorney General Eric T. Schneiderman signed memoranda of understanding that will allow the three agencies to collaborate in efforts to prevent worker misclassification under federal and state laws.
In 2011, the U.S. DOL launched a Misclassification Initiative, which was convened under the auspices of Vice President Joe Biden’s Middle Class Task Force. Similar memoranda of understanding with state government agencies currently exist in California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah, and Washington. As a result of these efforts, during the past two years, the U.S. DOL has collected over $18.2 million in back wages for more than 19,000 workers in cases involving worker misclassification under the Fair Labor Standards Act.
As stated in its press release, New York State’s partnership with the U.S. DOL demonstrates a move to “aggressively enforce[ ] the labor laws” and ensure a “level playing field” for employers that properly classify their employees. This heightened scrutiny follows the establishment of a special task force within the N.Y. DOL to combat employee misclassification and enactment of the New York State Construction Industry Fair Play Act of 2010, which developed a new standard for worker classification in the construction industry and provided additional penalties for employers that fail to properly classify their employees.
In light of these efforts and the possibility of information sharing across federal and state agencies, employers should exercise increased caution when classifying workers in New York as well as the other 14 states participating in the Misclassification Initiative. As the line between an employee and an independent contractor is often highly fact-specific and remains subject to aggressive governmental investigations, employers should closely analyze any independent contractors to ensure that they have been properly classified under state and federal laws. Information regarding the standard used by the N.Y. DOL can be found here.