In my November 2011 blog, Wired Reputations: the US DOL's New Form of Pressure on Brands, I wrote about how the US DOL has harnessed digital media to directly contact workers and consumers in order to further the awareness of their rights. As a follow up, I would like to turn your attention to the flipside, that is, how the DOL reaches out to employers, specifically to alert them to the number of resources available to help employers understand how to properly classify employees vs. independent contractors. This is of tantamount importance, as the DOL continues to place an increasing amount of importance on targeting improper classification and has dedicated an expanded portion of its 2013 budget to this specific enforcement target. These points were explained in more detail during a live Q&A session hosted by a number of members of the DOL, including Labor Secretary Hilda L. Solis, on Monday February 13, 2012 (the transcript may be found here).
The session revealed that the targeting of the misclassification of employees as either independent or overtime-exempt will receive continued and increased focus as part of the Wage and Hour Division's (WHD) Misclassification Initiative. It mentioned the September 2011 signing of the Memorandum of Understanding between the DOL and the IRS, which will coordinate the agencies' efforts to strengthen enforcement. The WHD's website was mentioned as a jumping-off point for additional resources and has links to 13 state websites that explain how each state will participate in the Misclassification Initiative. Other resources found on the page include a CBS News segment on the issue, which may be viewed here.
According to Nancy Leppink, a representative from the WHD, because enforcement related to misclassification of employees as independent contractors and overtime-exempt employees has been particularly successful, the department is expanding the budget available for this type of activity and using it to hire 35 full-time employees and increase education efforts for employers and employees about their rights and responsibilities. The DOL will continue to focus on low-wage industries that employ vulnerable workers, including agriculture and garment. This is more severe in California where Senate Bill 459, signed into effect on January 1, 2012, increased penalties to employers who are found to have willfully misclassified their employees as independent contractors.
With such attention being paid to the issue, brands would be wise to expend an increased amount of resources on ensuring that their supply chain complies with classification laws. For more information on US federal and state law, check out UL RS' Labor and Employment Standards Library website. For more information on training services, check out UL RS' Training and Education website. For more information on remediation services, check out UL RS' Collaboration and Continuous Improvement website.