The HR Legal News Blog

DOL Misclassification Initiative

In September 2011, the Department of Labor announced an initiative designed to identify and correct the misclassification of individual workers as independent contractors rather than as employees. The initiative is gathering steam. The DOL has already entered into partnership with the IRS and fourteen states and actively seeking alliances with additional state agencies. DOL Misclassification Initiative website.

The stakes are high. In December 2013, the Department of Labor brought suit against a Georgia restaurant to recover $1,997,726 in back wages and liquidated damages for 84 employees who were allegedly misclassified as independent contractors. Hibachi Grill & Supreme Buffet sued by U.S. Labor Department.

Once the DOL begins an investigation, additional irregularities frequently come to light. The Department of Labor determined that Norwood Commercial Contractors, an Illinois commercial construction company, had misclassified sixteen employees as independent contractors. The employer’s troubles did not end with the sixteen employees, however. The Department of Labor had identified irregularities in the payment of wages to an additional eighty employees. By the time the case was closed by consent in December 2013, the employer agreed to pay almost $400,000 in back wages and damages to 96 employees. Norwood Commercial Contractors agrees to pay $400,000 in back wages and damages.

In addition to receiving back wages and related damages, a misclassified employee may also be eligible to participate in employee benefit plans and receive other perquisites associated with employment.