On December 19, the United States Department of Labor issued comprehensive new guidance making it clear that it intends to continue to aggressively pursue employers who misclassify employees as independent contractors. The transmittal message for the new guidance, entitled “Misclassification Affects Everyone,” states the DOL’s position that “The misclassification of employees as independent contractors is a huge problem for workers, employers who play by the rules and our economy.” Although the document states that the DOL supports valid independent contractor arrangements, the definite direction of the DOL is to limit many common ways businesses use independent contractors rather than employees.
The DOL’s new guidance is accessible through a web page and provides quotes from misclassified workers, including one who compares his job as a taxi driver to “modern day slavery.” Although the approach may seem overly dramatic, the web site does provide a variety of useful tools, such as a section entitled “Myths About Misclassification,” which addresses twelve commonly held misconceptions about independent contractor arrangements.
The DOL’s overall direction under the incoming presidential administration cannot be predicted with complete certainty, but employers can safely predict that their classification of workers as independent contractors will continue to be closely scrutinized—not just by the DOL, but also by state and local taxing authorities. Employers should therefore consider auditing their independent contractor arrangements by using the DOL’s new guidance and by consulting with their employment counsel.