The Internal Revenue Service has joined forces with the U.S. Department of Labor to hold businesses accountable that are possibly misclassifying employees.
The IRS and DOL are targeting certain industries, and you may work in one of them. If your employer has misclassified you on purpose, he or she can be liable under the law.
What is happening
The Department of Labor has instituted a Misclassification Initiative focusing on companies that are misclassifying employees as independent contractors. In so doing, the businesses can avoid having to pay overtime or, in some cases, even minimum wage. Meanwhile, the IRS has established a Questionable Employment Tax Program, the purpose of which is to ferret out “employment tax schemes and illegal tax practices.” In simple terms, the IRS wants to see the enforcement of state wage and hour laws as well as the enforcement of unemployment tax laws.
Targeted industries
Almost every industry uses independent contractors, so most businesses are capable of skirting the rules about misclassifying employees. However, the DOL has prepared a list of the industries in which those rules will most likely be broken: security, construction, janitorial services, nursing, internet services, staffing, transportation and trucking, catering services, hotel/motel, oil and gas, cable companies, landscaping, and limousine services.
DOL prosecutions
Misclassifying employees as exempt or as independent contractors can be very expensive for a company if the Department of Labor discovers what is going on. For example, they won a $1.075 million consent judgment in a case involving the misclassification of cable installers. They won a similar judgment in the amount of $395,000 in the case of a construction company that was misclassifying carpenters, masons, electricians, painters, laborers and drywall hangers.
What you can do
If your employer is deliberately misclassifying you either as an exempt employee or an independent contractor, there are legal options for you to explore. Your employer could be liable for such actions, which would satisfy both the DOL and the IRS, and you would be eligible to recover damages.
