On April 22, 2010, a revised version of the Employee Misclassification Prevention Act (“Act”) was introduced. If enacted, the Act, would amend the FLSA and provide a host of new enforcement mechanisms and penalties to combat employer use of the “independent contractor” classification to avoid minimum wage and overtime payment obligations.
If passed the Act would (among other provisions):
- require employers to keep records reflecting the correct status of each worker as an employee or nonemployee (which the FLSA currently does not require);
- require employers to notify workers in writing of their classification as an employee or nonemployee (not required); and
- make it unlawful to retaliate against non-employee workers who advocate for their rights under the Act (as discussed here, the FLSA does not typically protect non-employees from retaliation for seeking alleged unpaid monies).
Due to the federal and state focus on misclassification, all employers should closely review whether contractors are “economically dependent” on the business as well as (1) the degree of control exercised by the employer over the workers; (2) the workers’ opportunity for profit or loss and their investment in the business; (3) the degree of skill and independent initiative required to perform the work; (4) the permanence or duration of the working relationship; and (5) the extent to which the work is an integral part of the employer’s business.” See, e.g. Velu v. Velocity Express, Inc., 666 F. Supp. 2d 300 (E.D.N.Y. 2009).
A more detailed Jackson Lewis analysis of the proposed legislation is available here.