It’s time for employer clients to take a good look at how they are classifying their workers. Secretary of Labor Hilda Solis hosted a photo opp this week to sign a memorandum of understanding with the Internal Revenue Service that the secretary says will help to end the business of misclassifying employees in order to avoid providing employment protections.
Labor commissioners and other agency leaders from seven states –Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Utah and Washington — also signed similar memos with the Wage and Hour Division, and, in some cases, with the Employee Benefits Security Administration, Occupational Safety and Health Administration, Office of Federal Contract Compliance Programs, and Office of the Solicitor. Solis said agreements with Hawaii, Illinois, Montana and New York will be next.
According to a press release from the Department of Labor, “The memorandums of understanding will enable the U.S. Department of Labor to share information and coordinate law enforcement with the IRS and participating states in order to level the playing field for law-abiding employers and ensure that employees receive the protections to which they are entitled under federal and state law.
“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 laws — for example, if an employee is misclassified as an independent contractor and subsequently denied rights and benefits to which he or she is entitled under the law. In addition, misclassification can create economic pressure for law-abiding business owners.”
The Michigan Lawyer 