I had blogged a few weeks ago about the Obama Administration’s initiative to revamp the white collar exemption rules to make more people overtime eligible. Well, the Administration is not waiting for such revisions to seek to “root out” instances of alleged misclassification. It has added $25 million dollars in the federal budget for the US Department of Labor to “fight” employee misclassification.
Under the proposed budget, it is anticipated that the DOL will hire more than 350 new employees, including 177 investigators and other enforcement staff. The Wage Hour Division, the entity charged with conducting investigations relating to misclassification, will hire an additional ninety new investigators.
The amount of $25 million will go towards the so-called “misclassification initiative.” Investigators will look more numerously to and closer at alleged employee misclassification, such as when workers are deemed independent contractors or consultants. They are then ostensibly denied overtime and the protection of unemployment benefits.
The additional enforcement personnel will work pursuant to a joint undertaking by the DOL and Treasury to take away the reasons that employers misclassify employees and to beef up the power of both agencies to seek enhanced penalties for violations of the employee status rules/laws.
Nancy Leppink, the Deputy Administrator of the USDOL, has stated that when misclassification occurs “employees are deprived of the protections and benefits of the nation’s most important employment laws, and their employers gain an unfair advantage in the marketplace. Employees are particularly vulnerable to misclassification in these difficult economic times.”
The most important thing is to be proactive. Undertake, through and with counsel, an internal examination/scrutiny of all jobs considered exempt to ensure that they “really” are. If you conclude some are not exempt, make the tough decision to reclassify the jobs. Remember, most of all, titles mean nothing. You need to match up the actual duties performed against the criteria set forth in the regulations to make decisions on exempt status.
Easier said than done…