Labor addresses misclassification of independent contractors

On Behalf of | Nov 27, 2013 | Employee Rights

A new relationship with the United States Department of Labor and the attorney general’s office has pledged to provide protection of employee rights by addressing their misclassification as independent contractors. While the issue has recently been at the core of franchising procedures for some time, companies are only now assuming more control of the way franchises work, an act that benefits only the company.

The two agencies are pioneering changes in the federal labor department. Their latest accomplishment involved collaboration with the Wage Hour Division to recover over $18 million dollars in back pay for almost 20,000 workers. This was almost a 100 percent increase in recovery of back pay from before the agreement. The violation of minimum wage and overtime laws harks back to the Fair Labor Standards Act and helps ensure proper treatment and classification of workers. /p>

A spokesperson for the attorney general stated the partnership would actively enforce labor laws and bring about fair treatment for honest, law-abiding employees. Cooperation in information sharing would support investigations into proper protection of the rights of the state’s workforce, as well as lead to more employer compliance. Citing the unfair use of independent contractors, while not illegal, had been used to evade government labor laws. Misclassification of employees posed a serious issue, as these contractors were not privy to benefits such as medical care, overtime or minimum wage pay, or unemployment insurance. It also puts pressure in the pockets of business owners, who find it challenging to butt heads with businesses attempting to get around the law.

Franchisee litigators were not surprised at the recent partnerships to enforce labor laws due to poor economic conditions in federal and state governments. These agencies had targeted franchisors that could help enforce taxing non-compliant entities and combat the potential source of government revenue based on unfair classification of employees. These businesses included franchises where owners didn’t speak English well and immigrants who are unskilled in U.S. business models.

The good news is that under this agreement, the agencies will work together and share information to reduce the incidence of misclassification of employees, to help reduce the tax gap and to improve compliance with federal labor laws. It will go a long way in the promotion of employee rightsin New York State.

Source:, “US Labor, NY Tackle Employees Disguised as Franchisees” Janet Sparks, Nov. 22, 2013

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