As the Department of Labor’s “Right to Know” initiative continues to move forward with hopes of helping end the practice of employee misclassification, a rule that would require employers to inform those classified as independent contractors about the legalities of such classification has re-emerged.
It is estimated that employee misclassification will cost the government more than $7 billion in payroll taxes over the next decade. The “Right to Know” initiative, initiated in 2010, requires employers to reveal more information about how they classify their employees…to their employees. The DOL will boost the “Right to Know” by requiring companies to provide employees with a detailed classification analysis. According to Marjorie Sterne of We Comply that analysis is likely to include:
• The employment classification of the employee;
• The basis for the classification determination; and
• Notification of the benefits and legal protections attendant to that classification.
Employers must already undertake an analysis of the circumstances of employment when assigning employment classifications. However, a Right-to-Know rule could increase the burden on employers by requiring them to provide an individualized written analysis to each employee. That analysis, if done incorrectly, could even be raised as evidence against the employer in a misclassification lawsuit under the Fair Labor Standards Act (FLSA).
This page out of the G.I. Joe playbook should be a powerful resource in battling employee misclassification.