A recent Human Resource Executive Online article illustrates what FoxHire has been saying on this blog for months: misclassifying W-2 Employees as Independent Contractors and employees who should receive overtime as exempt are two of the Obama administration’s target areas for increased enforcement.
Regarding the crackdown on the misclassification of Independent Contractors, the article refers to the bill that was introduced in Congress that would make misclassification a federal labor-law violation and require additional notice and recordkeeping obligations of employers. And as we explained in more detail in a blog post last week, the Department of Labor is unveiling its new Plan/Prevent/Protect initiative that would require employers to create plans to prevent Fair Labor Standards Act (FLSA) violations such as the misclassification of employees as Independent Contractors and overtime violations.
The article recommends that companies audit their use of Independent Contractors and review employees who are classified as exempt from overtime to weed out any possible violations. So how can you, as a contract recruiter, help? Well, for starters, you can offer to help them convert their current Independent Contractors to W-2 Employees. Through you, they can put the workers on contract assignments and outsource the actual employment of those workers to a back-office service provider, such as FoxHire, which will become the W-2 Employer of Record and handle all taxes, benefits, etc. This can be like killing two birds with one stone because contractors employed through FoxHire are paid for every hour worked, including overtime for hours worked over 40 in a week (or whatever the particular state law requires). So not only will be they be properly classifying the worker as a W-2 employee, they will also be complying with FLSA overtime regulations as well!
This article is for informational purposes only and should not be considered legal or financial advice.