Independent Contractor Misclassification – The Next Big Thing Independent Contractor Misclassification – The Next Big Thing

Independent Contractor Misclassification – The Next Big Thing

For the last few years, the “big thing” in employment litigation has been the misclassification of non-exempt employees as exempt under the Fair Labor Standards Act.  As we discussed in a prior article, the U.S. Department of Labor recently has put employers on notice that they will be aggressively looking at misclassification of individuals as independent contractors.  The U.S. DOL has taken the position that under the Fair Labor Standards Act the definition of employee is broad and more individuals should be classed as employees. 

U.S. DOL is not the only party who can seek to correct the misclassification of independent contractors.  The plaintiffs’ bar can bring suit as well.  This may well be the next big thing in terms of trying to collect minimum wage and overtime payments to people improperly classified as independent contractors.  In addition, the government has the incentive to bring lawsuits to recover unpaid FICA and FUTA taxes as well as federal income taxes which may not have been paid by independent contractors. 

Our advice is for employers to review those individuals they consider to be independent contractors.  You and counsel may be able to make changes to strengthen the independent contractor relationship and make these individuals or groups more independent.  It is clearly an exercise whose time is now. 

For more information, contact Pete Wade or any member of Ice Miller’s Labor, Employment and Immigration Group. 

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.

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