The Department of Labor Concludes that Most Workers are Employees, Not Independent Contractors

Posted by on Nov 15, 2015 in Blog, Employers, Employment Law | 0 comments

The Wage and Hour Division of the U.S. Department of Labor (DOL) was busy this past summer.  In particular, it addressed the issue of the classification of workers as independent contractors via a formal interpretation memo.  The memo can be viewed in its entirety on the DOL’s website.

The DOL’s memo essentially expands the applicable criteria for determining whether a worker is an independent contractor or an employee entitled to the legal protections of the FLSA, including minimum wage, overtime compensation, unemployment compensation and workers’ compensation.   The memo states that employees often misclassify employees as independent contractors to cut costs and avoid complying with labor laws such as the FLSA.

The DOL’s memo clarifies that the “economic realities” of the relationship between the employer and the worker must be examined in order to properly classify the worker.  Under the economic realities test, the degree to which the employer controls the worker is just a single factor to be considered in the context of a broader inquiry into the economic relationship between the parties.  Other relevant factors include:

  • (a) the extent to which the work preformed is an integral part of the employer’s business,
  • (b) the worker’s opportunity for profit or loss depending on his or her managerial skill,
  • (c) the extent of the relative investments of the employer and the worker,
  • (d) whether the work performed requires special skills and initiative, and
  • (e) the permanency of the relationship.

The DOL emphasizes that no single factor is determinative.  Rather:

“[t]he factors should be considered in totality to determine whether a worker is economically dependent on the employer, and thus an employee.”

A worker who is in business for him or herself, and is thus economically independent from the employer, is an independent contractor.  Significantly, the DOL states that these factors should be “liberally construed” to provide broad coverage and protection for workers.  Moreover, how the employer decides to label the relationship is not relevant to determining the worker’s classification.

The DOL ultimately concludes that “most workers are employees under the FLSA’s broad definitions.”

If you have any questions about worker classification, contact my office.

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Wage and Hour Compliance in 2014: What Smaller Employers Should Know, Part 1

Posted by on Mar 10, 2014 in Blog, Employers, Employment Law | 0 comments

I strongly advise employers to conduct regular and comprehensive wage and hour audits to ensure that their pay practices comply with all aspects of wage and hour laws.

News in the area of wage and hour law continues to be discouraging for employers, and each year, wage and hour class-based litigation and government enforcement actions continue to increaseFair Labor Standards Act (“FLSA”) claims filed in federal court are now at record highs.  Smaller employers increasingly are targeted, as plaintiffs’ law firms have improved their efficiency in identifying and litigating potential wage and hour claims.  Smaller employers have limited time and resources, and may not be able to conduct a soup-to-nuts wage and hour compliance audit. 

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Wage and Hour Compliance in 2014: What Smaller Employers Should Know, Part 2

Posted by on Mar 10, 2014 in Employees, Employers, Employment Law | 0 comments

Part 2 of Wage and Hour Compliance in 2014 addresses three final issues that small employers should understand and review:  compensation for non-exempt employees and the classification of exempt employees. Read Part 1 here

 

Part 2:  Compensation For Non-Exempt Employees and Classification of Exempt Employees

 

3.  Properly Calculating Overtime Compensation for Non-Exempt Employees


Most employers understand that non-exempt employees are entitled to overtime compensation at a rate equal to one and one-half times their regular rates for all time worked in excess of 40 in any work week. 

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Launch your employment law audit today

Posted by on Apr 23, 2013 in Blog, Employers, Employment Law | 0 comments

I am offering a cost-efficient, comprehensive audit of your employment policies and practices to assist you in ensuring that your business complies with Pennsylvania and federal laws.

The issues addressed in the audit include:

  • Employee classification
  • Wage and hour practices
  • Employee handbooks
  • Employment contracts and offer letters
  • Restrictive covenants
  • Workplace privacy

Steps to complete the audit:

  • I will provide you with an audit questionnaire to complete.
  • You will assemble and transmit documents that relate to your current employment practices and policies.
  • I will meet personally with you to review your responses to the questionnaire and related documents to see how well your business meets the current Pennsylvania and federal employment requirements.

To begin the process, contact me.

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