U.S. Department of Labor Steps Up Its Overtime Enforcement Efforts

The United States Department of Labor is continuing to ramp up its efforts to curb overtime abuses among U.S. employers:

“WASHINGTON — Nancy J. Leppink, deputy  administrator of the U.S. Department of Labor’s Wage and Hour Division, and Louisiana Workforce Commission Executive Director Curt  Eysink signed a memorandum of understanding Feb. 23 regarding the  improper classification of employees as independent contractors. This  partnership is the 13th of its kind for the U.S. Department of Labor.

“This memorandum of  understanding helps us send a message: We’re standing united to end the  practice of misclassifying employees,” said Leppink.  “This is an important step toward making sure that the American dream is  still available for employees and responsible employers alike.”

“Initiatives like this are critical in leveling the  playing field for businesses that play by the rules,” Eysink said. “They’re  also vital for ensuring that eligible, hardworking men and women get the  coverage and benefits they earn if they are injured on the job or lose their  jobs through no fault of their own.”

Employee  misclassification is a growing problem. In 2011, the Wage and Hour  Division collected more than $5 million in back wages for minimum wage and  overtime violations under the Fair Labor Standards Act that resulted from  employees being misclassified as independent contractors or otherwise not  treated as employees.

Business  models that attempt to change, obscure or eliminate the employment relationship  are not inherently illegal, unless they are used to evade compliance with  federal labor law. The misclassification of employees as something else, such  as independent contractors, presents a serious problem because these employees  often are denied access to critical benefits and protections  —  such as family  and medical leave, overtime compensation, minimum wage pay and Unemployment Insurance  —  to which they are entitled.  In addition, misclassification can create economic pressure for law-abiding  business owners, who often find it difficult to compete with those who are  skirting the law.Employee misclassification  also generates substantial losses for state Unemployment Insurance and workers’  compensation funds.

Memorandums of understanding with state government agencies arose as part of  the U.S. Department of Labor’s Misclassification Initiative, which was launched  under the auspices of Vice President Biden’s Middle Class Task Force with the  goal of preventing, detecting and remedying employee misclassification. California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington  have signed similar agreements. More information is available on the U.S.  Department of Labor’s misclassification Web page at http://www.dol.gov/misclassification.”

Source:  http://www.dol.gov/opa/media/press/whd/whd20120205.htm

The cooperation between federal and state labor agencies is part of a larger federal effort to enforce federal overtime law:

“The misclassification of employees as something other than employees, such as independent contractors, presents a serious problem for affected employees, employers, and to the entire economy. Misclassified employees are often denied access to critical benefits and protections – such as family and medical leave, overtime, minimum wage and unemployment insurance – to which they are entitled. Employee misclassification also generates substantial losses to the Treasury and the Social Security and Medicare funds, as well as to state unemployment insurance and workers compensation funds.

The Department’s Misclassification Initiative, launched under the auspices of Vice President Biden’s Middle Class Task Force, is making great strides in combating this pervasive issue and to restoring these rights to those denied them.  In September 2011, Secretary of Labor Hilda L. Solis announced a major step forward with the signing of a Memorandum of Understanding (MOU) between the Department and the Internal Revenue Service (IRS). Under this agreement, the agencies will work together and share information to reduce the incidence of misclassification of employees, to help reduce the tax gap, and to improve compliance with federal labor laws.

Additionally, labor commissioners and other agency leaders representing thirteen states have signed MOUs with the Department’s Wage and Hour Division, and in some cases, with its Employee Benefits Security Administration (EBSA), Occupational Safety and Health Administration (OSHA), Office of Federal Contract Compliance Programs (OFCCP), and the Office of the Solicitor. (See interactive map of participating states).  The Department is actively pursuing MOUs with additional states as well.

These MOUs will enable the Department to share information and to coordinate enforcement efforts with participating states in order to level the playing field for law-abiding employers and to ensure that employees receive the protections to which they are entitled under federal and state law. Employers that misclassify their employees may not be paying the proper overtime compensation, FICA and Unemployment Insurances taxes, or workers’ compensation premiums.”

Source:  http://www.dol.gov/whd/workers/misclassification/#stateDetails

Overtime cases require analysis of federal statutes, U.S. Department of Labor regulations, and court decisions.  I can help you with any employment law or labor law questions that you might have.  Please feel free to contact me for a free initial consultation about employment law or labor law.

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