FoxHire has discussed numerous times in this blog about how the federal government is stepping up enforcement on Fair Labor Standards Act (FLSA) violations, particularly the misclassification of W-2 Employees as Independent Contractors and incorrectly classifying employees as exempt from overtime. Well, it now appears that the Department of Labor (DOL) is taking that increased enforcement a huge step further by proposing new regulations requiring employers to be more proactive at preventing violations before the DOL comes knocking at their door.
The DOL’s Spring 2010 Regulatory Agenda unveiled its new “Plan/Prevent/Protect” initiative in which employers will be required to develop plans to prevent violations of a wide range of employment regulations. Plan/Prevent/Protect is intended to eliminate what the DOL calls the ”catch me if you can” mentality where some employers determine that the risk of getting caught and having to pay penalties is worth the benefits they get from violating the law.
The initiative will require employers to create or enhance plans to prevent issues such as workplace injury, infectious disease, affirmative active action violations, and, yes, FLSA violations. Specifically, the Wage and Hour Division will publish a “Notice of Proposed Rulemaking” that would require employers to provide basic employment information, including how pay is calculated, to each worker. In addition, if they exclude a worker from FLSA coverage, they would be required to perform a classification analysis and disclose that analysis to the worker. It is not clear if this applies to only workers who are classified as Independent Contractors or also to those classified as employees who are denied overtime.
As a contract recruiter, you may get pressure from both clients and contractors to classify them as Independent Contractors or exempt from overtime. But as we’ve pointed out time and time again, the Department of Labor is serious about both types of classification violations, and it is important to your reputation as a contract recruiter to be knowledgeable about the regulations and be ready to provide advice to clients and contractors who may not be as enlightened.
This article is for informational purposes only and should not be considered legal or financial advice.