On February 9, 2012, the U.S. Department of Labor (“DOL”) announced that California has entered into a “memo of understanding” to work with the DOL to “end the practice of misclassifying employees” as independent contractors. This agreement between California and the DOL is part of the federally funded Misclassification Initiative that was launched in September 2011. The purpose behind the Misclassification Initiative is to enable federal and state agencies to coordinate the enforcement of wage and hour laws. California is the twelfth state to enter into a “memo of understanding” with the DOL.
Thus far, its not clear whether the Misclassification Initiative has been a success. The DOL has stated in a press release that in 2011, it collected more than $5 million in back wages resulting from misclassification of employees as independent contractors. However, the DOL has not stated whether there is any connection between the recovery of this money and the coordinated efforts of federal and state agencies. Similarly, the DOL has not indicated how much of this $5 million in back wages was collected after September 2011. Additionally, I have found it surprising that it took nearly five months for another state to join this Initiative. Presumably, the failure to attract more states to join efforts with the DOL has been a disappointment.
Along the same lines, in September 2011, when the federal government launched the Misclassification Initiative, I wrote that the DOL has failed to provide any information as to how the DOL and state agencies would work together to end misclassification. Its now February and there is still no indication that there are any procedures in place for a coordinated “attack” on misclassification.
While the success of the Misclassification Initiative is dubious, at best, employers should still expect the government to scrutinize, and likely dispute, the classification of any worker as an independent contractor.