Independent Contractor Misclassification a Priority for Obama
The Obama Administration has made clear in its proposed budget for the fiscal year 2011 that it will be targeting the misclassification of independent contractors. As part of the 2011 Budget, the Departments of Labor and Treasury are pursuing a joint proposal that eliminates incentives in law for employers to misclassify their employees; enhances the ability of both agencies to penalize employers who misclassify; and restores protections to employees who have been denied them because of their improper classification.
Employers should be aware that the Department of Labor will often find misclassification as an independent contractor where the following factors exists, singly or in combination with others:
- The independent contractor performs the same kind of work that employees also perform for the business;
- The independent contractor performs work that is essential to the business;
- The independent contractor is prohibited from selecting their own personnel;
- The independent contractor is not paid per project;
- The independent contractor may not/does not, perform similar services for other businesses;
- The independent contractor lacks the ability to control the manner in which services are performed;
- The independent contractor receives training from the business;
- The independent contractor does not provide their their own tools/suppies.
Employers should take extreme care to ensure independent contractors are properly classified. Failure to do so can lead to significant penalties.
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