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How the government monitors the classification of workers

The federal government finds that companies operating in almost every industry could run afoul of employment laws concerning misclassification of employees.

The U.S. Department of Labor has joined forces with the Internal Revenue Service and various workforce agencies to detect and stop misclassification. 

About the FLSA

In force since 1938, the Fair Labor Standards Act is an employment law that sets the minimum wage and overtime pay plus standards for record keeping and youth employment. For example, the FLSA requires employers to pay time and a half to an employee who works beyond 40 hours a week. Common FLSA lawsuits include those in which an employee claims he was not paid for the overtime hours he worked or those in which an employee claims he was misclassified as an independent contractor.

Targeted companies

Although any kind of company could draw scrutiny, the partnership of the Labor Department, the IRS and state workforce agencies targets certain industries for compliance issues: construction, nursing, staffing, janitorial services, transportation, trucking, security, hotel/motel, catering services, oil and gas, landscaping, car services and internet services. The Labor Department has investigated and prosecuted hundreds of businesses for misclassifying their employees as independent contractors. By doing so, these companies were not paying the employees minimum wage and overtime.

Exemptions

Three classes of employees—executives, highly compensated employees and administrative employees—may be exempt from FLSA laws. The responsibilities of these employees often relate to day-to-day business operations rather than production or labor tasks.

Actions for employers

Lately, there has been an upswing in class action lawsuits brought by employees who challenge their FLSA-exempt classification. Employment laws are complex and there are frequent changes, which is why many businesses depend on an experienced employment law attorney to ensure that they are compliant with the FLSA and to represent them when necessary on misclassification matters in either state or federal court.

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