New DOL Administration Gives Free Pass to Misclassification of Independent Contractors

Nathan Eisenberg

Earlier today, the U.S. Department of Labor announced that it was rescinding a July 15, 2015 interpretive memorandum governing independent contractors. The Obama-era memorandum had indicated that that “most workers [classified as independent contractors] are employees” as defined by the Fair Labor Standards Act. By rescinding the memorandum, it signals that the Trump administration will give a free pass to misclassification of employees as independent contractors.

Misclassification of employees as independent contractors benefits employers who are attempting to avoid the liabilities that come with hiring employees. Among other things, the Fair Labor Standards Act (FLSA) guarantees employees at least a minimum wage for all hours of work and overtime wages for hours over forty in a week. Employees who are misclassified are often cheated out of wages that they are legally entitled to under the FLSA. Independent contractors may also be deprived of protection under other state and federal employment statutes, which only cover employees.

The revocation of the interpretative memorandum does not have the effect of changing the law on independent contractors. Only the courts and Congress can make such changes. However, it does reflect that, rather than protecting employees from wage losses which result from misclassification, the DOL will be more lenient towards employers who wish to shift the costs of employment onto individuals working as independent contractors.

If you believe that you have been incorrectly misclassified as an independent contractor, please don’t hesitate to contact us at (414) 240-1185. Improperly classified employees may be entitled to back wages, overtime, and other penalties.