September 28, 2011

Minnesota to cooperate with Feds in contractor misclassification enforcement

Posted in Fair Labor Standards Act, Independent Contractors, Independent Contractors tagged , , , , , at 9:05 am by Tom Jacobson

In memorandum of understanding (MOU) between the Minnesota Department of Labor and Industry (DOLI) and the United States Department of Labor (DOL), the State of Minnesota agreed on September 19, 2011 to coordinate with DOL and the IRS in their efforts to end the problem of employers misclassifying employees as independent contractors (see Labor secretary, IRS commissioner sign memorandum of understanding to improve agencies’ coordination on employee misclassification compliance and education).

The problem is that when an employee is improperly classified as an independent contractor, the consequences are wide-ranging.  For example, unpaid overtime, taxes, eligibility for unemployment benefits, protection under various equal employment opportunity laws, eligibility for leaves of absence, personnel record retention, etc., all come into play.  Because of these intertwined laws (which are all enforced by different state and federal agencies), the DOL spearheaded this attempt to coordinate efforts.  Regarding the MOU, DOL Secretary Hilda Solis said,”We’re here today to sign a series of agreements that together send a coordinated message: We’re standing united to end the practice of misclassifying employees…. We are taking important steps toward making sure that the American dream is still available for all employees and responsible employers alike.”

Other participants in this coordinated effort are DOL’s Employee Benefits Security Administration, Occupational Safety and Health Administration, Office of Federal Contract Compliance Programs and Office of the Solicitor.  The states of Connecticut, Maryland, Massachusetts, Missouri, Utah and Washington also signed the MOU.  It appears that Hawaii, Illinois, Montana and New York will follow suit.

It’s too early to tell whether this means Minnesota’s DOLI will become more aggressive in enforcing misclassification cases.   However, the MOU certainly confirms that if DOLI finds employees who were improperly classified as independent contractors, the news will likely spread to numerous other agencies, thus compounding the consequences for any violators.  To reduce the risk of liability, employers should carefully examine any existing or proposed independent contractor relationships to determine whether true independence exists under the law.

For more information about this article, please contact me at taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2011 Swenson Lervick Syverson Trosvig Jacobson Schultz, PA

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May 27, 2011

Employees without time records? The DOL now has an app for that.

Posted in Fair Labor Standards Act, Hours Worked, Meal Periods, Overtime, Record Keeping tagged , , , at 10:31 pm by Tom Jacobson

In its ongoing effort to more aggressively enforce the Fair Labor Standards Act, the U.S. Department of Labor has introduced its first app.  It’s the DOL Timesheet app  which enables employees to use their smart phones to track their hours worked and wages owed.

In some respects, this is nothing new.  Employees have always had the right to keep track of their work hours, and the DOL  also provides printable calendars for tracking time and wages.  The DOL’s app simply provides a new tool that will make it even easier for an employee to do so.

It is an employer’s responsibility to keep records of the hours worked by its employees.  If those records are not kept, then in the event of a dispute over wages owed, overtime or any other time-keeping issue, the DOL’s new app may provide just the evidence the employee or the DOL needs to prove their case.

For more information about this article, please contact me at taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2011 Swenson Lervick Syverson Trosvig Jacobson, PA

September 15, 2010

DOL to Disney: Failing to pay for hours worked ain’t no Mickey Mouse

Posted in Exempt/Non-Exempt Employees, Fair Labor Standards Act, Hours Worked, Record Keeping tagged , , , , at 5:00 pm by Tom Jacobson

Sixty-nine employees of Disney World in Orlando, FL will be receiving $433,819.00 in back wages after a U.S. Department of Labor investigation uncovered violations of the Fair Labor Standards Act.

The workers were a group of non-exempt inventory control clerks in the park’s food and beverage department who were not paid for work done before and after their normal shift, during meal times, and when working from home.

The FLSA requires that non-exempt workers be paid for “hours worked.”  Generally speaking, “hours worked” include all time an employee must be on duty, or on the employer’s premises or at any other prescribed place of work, from the beginning of the first principal activity of the workday to the end of the last principal work activity of the workday.  This includes time spent working when employees are supposed to be on their breaks.

“While Walt Disney has specific rules regarding off-clock work, an investigation conducted by the Department of Labor’s Wage and Hour Division found that managers within the company were not adhering to those important policies,” said Wage and Hour Deputy Administrator Nancy Leppink. “It is not enough to have policies. Management must also ensure that all supervisors are implementing them.”

The DOL’s investigative findings stress how important it is for employers to have and enforce policies for tracking and paying for the  “hours worked” by their non-exempt employees, even the time spent working from home and on breaks.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

July 22, 2010

Scent Company Passes Smell Test after DOL Independent Contractor Audit

Posted in Contracts, Independent Contractors tagged , , , , at 11:28 am by Tom Jacobson

St. Croix Sensory, Inc. is a sensory laboratory that specializes in odor testing, training, and sales and rental of sensory equipment. It hires “sensory assessors” to perform odor evaluations. The company enters into a contract with each assessor that states that the assessors are independent contractors and not employees.

These relationships worked well until the Minnesota Department of Labor started sniffing around during a routine audit. After that audit, the DOL determined that the assessors were employees, not independent contractors. The DOL ordered St. Croix to pay unemployment taxes on the wages earned by 37 workers.

Thinking that the DOL’s decision really stunk, St. Croix appealed to the Minnesota Court of Appeals. In its July 20, 2010 decision the COA overturned the DOL’s determination and ruled that the workers were independent contractors.

In its sixteen-page opinion, the COA emphasized that the contracts themselves were not determinative. The COA also stressed that because there is no general rule that covers all situations, each case must be judged upon its own particular facts. The COA then analyzed in detail the five main factors it considered: (1) The right to control the means and manner of performance; (2) the mode of payment; (3) the furnishing of material or tools; (4) the control of the premises where the work is done; and (5) the right of the employer to discharge. The COA also considered thirteen other criteria recognized under Minnesota law.

Ultimately, the COA found that based on the facts in this case, St. Croix’s sensory assessors passed the independent contractor smell test, so St. Croix came out smelling like a rose.

The case is St. Croix Sensory, Inc. v Department of Employment and Economic Development. You can read the COA’s opinion at http://bit.ly/apRUOq.

 

The case highlights how important it is to not rely on just a contract or loose “independent contractor” designations of workers. Rather, the entire working relationship must be considered in light of all of these factors. After all, if workers smell like employees, they are employees even if they are called independent contractors.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

July 6, 2010

DOL Interprets FMLA to Apply to Non-traditional Families

Posted in Family and Medical Leave Act, Leaves of Absence tagged , , , , at 11:08 pm by Tom Jacobson

In a June 22, 2010 administrative interpretation (Administrator’s Interpretation 2010-3), the U.S. Department of Labor has clarified the definition of “son or daughter” as it applies to leave requests under the Family and Medical Leave Act. Although the DOL noted that each case will have to be judged on its particular facts, the department also concluded that “either day-to-day care or financial support may establish an in loco parentis relationship where the employee intends to assume the responsibilities of a parent with regard to a child.” This interpretation expands the availability of FMLA leave to “non-traditional” families, including those in the lesbian-gay-bisexual-transgender community.

You can read the DOL’s interpretation at http://bit.ly/bcmXXk.

As a practical matter, the DOL’s interpretation means that employers subject to the FMLA will need to evaluate their FMLA policies to make sure they are compliant with this expanded definition of “son or daughter.” It also means that a much broader class of employees will now be eligible for FMLA leave.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.
 

 

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