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The Department of Labor is soliciting comments on a proposed survey to collect information about “employees' experience with worker misclassification,” the department said in a notice published in the Federal Register on Friday.
The notice, which states that under current federal labor laws, employers are not required to inform workers of their employment status, says improperly classified workers “are deprived of their legal wage entitlements, including minimum wage and/or overtime, as well as programs like unemployment insurance and workers compensation” because these programs generally apply only to those with employee, rather than independent contractor, status.
The notice says employers who misclassify workers “may achieve significant administrative and labor cost reductions, giving them a profound advantage over employers that properly classify their workers as employees.” The notice says, according to one estimate, improperly classifying only 1% of employees nationally would result in overall unemployment insurance revenue of nearly $200 million annually.
“The survey will provide critical information to department policymakers as to whether workers have knowledge of their employment classification and whether they understand the implications of their classification status,” says the notice.
Alexander J. Passantino, Washington-based senior counsel at law firm Seyfarth Shaw L.L.P., said in 2010 the DOL put on its regulatory agenda a proposed updating of the Fair Labor Standard Act's record-keeping regulation to require employers to report employees' status, including whether they are independent contractors.
Mr. Passantino, who is former acting administrator of the DOL's wage and hour division said, “I think what they're doing is trying to get this information to determine whether workers have knowledge of their classification, whether they understand it.”
If not, the DOL could do one of two things: Use the survey to support a rule on this issue, or to gather information for a legislative proposal, Mr. Passantino said.
Further information on how to submit comments is available in the Federal Register.
Last year, the DOL entered into a memorandum of understanding with the state of California under which it said it would work with California to address the issue of misclassification of employees.