Independent contractor misclassification is back in the news! The Department of Labor (DOL) has proudly reported that it has secured $18.2 million in back wages for misclassified workers since September 2011, marking a 97% increase over the amount it had managed to collect from similar offenders prior to that. The DOL shares the credit for this achievement with the states which have entered into specific agreements to jointly crack down on the willful misclassification of independent contractors. So far, 15 States have partnered with the DOL towards this initiative, with New York joining up last Monday. The results prove how successful the collaboration is.
Even as companies are increasingly turning towards a contingent workforce to fulfill their talent needs, the regulatory environment around them is growing more complex and controlling. As employers are juggling the various claims upon them from workers, they cannot afford to avoid or ignore the local, state and federal laws and must strive to stay compliant.
A case in point is how the Internet has made possible massive, open, online collaboration to create programs and content, spawning whole new business opportunities and strategies for success. Unlike Wikipedia which has succeeded in attracting voluntary submissions of free and open source content, Yelp is facing a lawsuit from thousands of ‘volunteers’ who are demanding wages under the Fair Labor Standards Act for their writing and editing work. Yelp used their reviews and pictures of local businesses and ‘unjustly enriched’ itself through these free contributions. The volunteers were rewarded with nothing more than titles like “Reviewer of the Day”, “Duke/Duchess” and “King/Queen” and through virtual memberships in “Elite Squads”. There is probably no precedent to decide a question like this, but the mind is completely boggled when we contemplate the future of any business which gets a mandate to pay back wages (possibly with penalties) to thousands of workers. The business will probably not survive such a calamitous requirement.
With contingent work spreading its wings and expanding to embrace brave new frontiers; companies which utilize such extended workforces will need to put the right policies, processes and governance in place to stay compliant. Vet your program for possible policy violations and when in doubt, get them validated. This caution is especially necessary with independent contractors and work that is crowdsourced online. Staffing companies which act as employers of record face legal liability along with their clients who used the workers for claims of discrimination, retaliation or wrongful termination. Of late, cases have been filed charging companies of willfully misclassifying workers as temporary workers only to deprive them of compensation and benefits which would be owed to them under a direct employment relationship. As of now we can standby, waiting to see how the issue gets resolved; with promises to update you soon as we have more information in this regard.
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