The Independent Contractor Dodge

I've heard about two independent contractor dodges in the last two days -- both with high visibility. One was on the Op-Ed page of The New York Times, the other via a news release from the Department of Labor. You don't have to read the tea leaves to realize that independent contractor status is a hot issue once again.

The New York Times Op-Ed page editors select timely topics that have news value. Some may call this combo "media hype," but you can rarely apply the label to The New York Times Op-Ed page and have it stick. Especially since this article is not just an opinion piece, it covers federal lawsuits and a bill in Congress. If you're not familiar with these details, read along.

The Op-Ed is called "Victims of Misclassification" by Marjorie Elizabeth Wood. It leads with the testimony at a Senate hearing from a Michigan construction worker whose employer, "changed his status from employee to independent contractor, [while] the conditions of his work stayed the same."

Ms. Wood points out that, "Fifteen states have now teamed up with the Department of Labor and the Internal Revenue Service to reduce misclassification through information sharing and joint investigations." This is at the encouragement of the Treasury Department's Inspector General.

In other words, be careful out there. If you haven't audited your practices recently, 2014 would be a good time to do it. I don't expect many of us Compensation Cafers to have egregious practices like the Hibachi Grill & Supreme Buffet, named in the December 17 DOL news release. They called their employees independent contractors; didn't pay them minimum wage, overtime; and didn't even maintain employee records (and now they owe $2 million). But I bet you do have some grey area practices.

For example, I know of an individual who has been a contract worker on a project for Big Pharma for over a year. (As he has been, on and off, for almost a decade.) His employer was just going to log him out for a while (again) when they asked him to work on a project in Europe. Some of the work is being done on site, some of it is in the US. I don't know what his current classification is or pay agreement, but I'm sure this complicated combo rings a bell with many of you. And with global mobility being added to the contingent workforce mix in so many companies, it's hard to keep track of your company's alignment with the regulations. But it would be prudent to get serious about it soon, so you can clearly explain what you are doing, if you have to.

November 14, 2013, WorldatWork DC Employment Law Update

During Tuesday’s Senate Subcommittee hearing – Payroll Fraud: Targeting Bad Actors Hurting Workers and Businesses – Senator Robert P. Casey, Jr. (D-PA) announced that he, along with Senators Tom Harkin (IA) and Sherrod Brown (D-OH), had that day introduced the Payroll Fraud Protection Act of 2013 (S. 1687), a bill that would “hold employers accountable” for independent contractor misclassification.  This hearing occurred just days after the Department of Labor (DOL) sent its proposed Worker Classification Survey to the Office of Management and Budget (OMB) for review and approval. The proposed survey will likely provide the groundwork for the future “right-to-know” rule that would amend an employer’s recordkeeping requirements under the Fair Labor Standards Act (FLSA) to provide employees with greater information about their employment status. . .

"Payroll Fraud." See what I mean?

Margaret O'Hanlon is founder and Principal of re:Think Consulting. She'll join Ann Bares and Dan Walter of the Compensation Cafe to speak  the unspoken -- Everything You Do (in Compensation) Is Communication --  in an upcoming book. Margaret brings deep expertise in compensation, career development and communications to the dialog at the Café. Before  founding re:Think Consulting, she was a Principal with Towers Watson. Margaret earned her M.S. and Ed.S. in Instructional Technology at  Indiana University, Bloomington. Creative writing is one of her outside  passions, along with Masters Swimming.

Comments

[E. James (Jim) Brennan]

Good to see another update about the ongoing saga. This is simply another shoe dropping in the continuing DOL campaign to whip up support for their plans to collect more tax money and penalties from employers.

http://www.compensationcafe.com/2011/09/amnesty-to-move-independent-contractors-to-employees-on-regular-payroll.html updated the prior story http://www.compensationcafe.com/2011/03/could-you-be-accused-of-wage-theft.html
which expanded the initial warnings in http://www.compensationcafe.com/2010/07/things-are-getting-hot-in-hr.html.

All the steps proposed by DOL will create a lot more work for total reward professionals.