Department’s Interpretation Focuses on Misclassification as Independent Contractors
DALLAS (Aug. 17, 2015) – The U.S. Department of Labor (DOL) recently issued an Administrative Interpretation stating that most independent contractors should be classified as employees under the Fair Labor Standards Act (FLSA), the national law firm of Baron & Budd reports. An article on the DOL’s important interpretation appeared July 15 on the website of the National Law Review.
The Department’s Wage and Hour Division issued the interpretation on July 15. The interpretation was focused on many workers being misclassified as independent contractors rather than employees.
According to the article, the DOL considers several factors when determining whether a worker should be classified as an employee or an independent contractor. These include the ability of a worker to profit or loss from his or her managerial skill, whether the type of work being performed requires special initiative or skills, and the degree of control that an employer retains or exercises over the worker.
Workers misclassified as independent contractors may be eligible for back overtime wages and health and insurance benefits. The DOL’s interpretation is consistent with long-standing federal law that employee status can never be waived, not even by contract. So, even if a worker signs a contract that he/she is an independent contractor, has their own corporate entity, and deducts business expenses on their tax return, they may nevertheless be considered an employee under laws such the FLSA and entitled to back compensation.
“Many companies improperly classify workers making low wages as independent contractors in an effort to cut costs,” said Allen Vaught, manager of the Employment Law Section of the national law firm of Baron & Budd. “We applaud the efforts of the Department of Labor to provide more clarity to the situation, and hope that employers throughout the country will take heed.”
About Baron & Budd, P.C.
The law firm of Baron & Budd, P.C., with offices in Dallas, Baton Rouge, Austin and Los Angeles, is a nationally recognized law firm with a nearly 40-year history of "Protecting What’s Right" for people, communities and businesses harmed by negligence. Baron & Budd’s size and resources enable the firm to take on large and complex cases. The firm represents individuals and government and business entities in areas as diverse as dangerous pharmaceuticals and medical devices, environmental contamination, the Gulf oil spill, financial fraud, overtime violations, deceptive advertising, automotive defects, trucking accidents, nursing home abuse, and asbestos-related illnesses such as mesothelioma.