Independent Contract Audits by Department of Labor (DOL) and the National Labor Relation Board (NLRB) are Creating Havoc for Employers!

Margie Faulk
From: Jan 26, 2023 - To: Dec 31, 2023
Recorded Webinar


Recent developments at the National Labor Relations Board (NLRB) and the U.S. Department of Labor’s Wage and Hour Division (DOL) could make it more difficult for businesses to classify workers as independent contractors. On January 6, the NLRB and the DOL announced that they entered a Memorandum of Understanding which provides for and encourages interagency cooperation through “information sharing, joint investigations and enforcement activity, training, education, and outreach.” In a separate press release, the NLRB stated that the Memorandum of Understanding “will allow for better enforcement against… misclassification of workers as independent contractors.”

Businesses that use independent contractor work would pay attention to the news out of Washington, D.C., because on October 11, the U.S. Department of Labor (DOL) announced its long-awaited proposed rule on contractor classification. The proposed rule would impose a six-factor “economic reality test,” with all the factors equally weighted. The six-factor test would look broadly at the “totality of the circumstances” to determine whether a worker is an independent contractor or employee under the Fair Labor Standards Act (FLSA).

The current rule prescribes a five-factor test to guide the analysis, two of which were designated as “core factors” carrying more weight: 1) nature and degree of control over the work and 2) the worker’s opportunity for profit or loss. As such, under the “core factor” test, if these two factors point in the same direction – an independent contractor – then it is likely that the worker is properly classified as an independent contractor.

By contrast, the proposed six-factor totality test eschews any predetermined weighting. Instead, it requires that each factor be considered in light of the economic reality of the entire activity at issue. The six factors are:

  • Opportunity for profit or loss depending on managerial skill
  • Investments by the worker and employer
  • Degree of permanence of the working relationship (including exclusivity)
  • Nature and degree of control (i.e. scheduling, supervision, price setting, and ability to work for others)
  • The extent to which the work performed is an integral part of the employer’s business
  • Skill and business-like initiative

Areas Covered:-

  • Learn why the DOL and NLRB are working together on this workplace issue
  • Learn what other regulatory agencies are creating their own version of Independent Contractor rules
  • Learn what are the several rules that Employers need to follow to stay compliant with the classification
  • Learn what the “proposed rules” include and which proposal can make challenges for Employers and agents of employers like professionals involved in employee relations
  • Learn what the penalties are for violating classification regulations by the DOL, NLRB, and IRS
  • Learn what the best practices are when classifying employees vs independent contractors
  • Learn how Employers and Professionals can provide their feedback before the regulations are in place
  • Learn how long Employers have to put the new rule in place
  • Learn how Employers can effectively mitigate the proposed regulations
  • Learn how the regulatory agencies have added the classification of Exempt/Non-Exempt as part of their classification audits for 2023

Why Should You Attend:-

These developments at the DOL and the NLRB could mean trouble for employers that misclassify workers as independent contractors. For example, an NLRB investigation of an unfair labor practice that leads to the conclusion that certain workers have been misclassified as employees could lead to the DOL finding a company is liable for unpaid overtime and minimum wages.

Considering this heightened scrutiny and potential narrower legal standard, it is now more important than ever to evaluate how companies structure an independent contractor relationship. It is particularly important for employers to seek guidance from experienced counsel when developing and implementing policies related to working with independent contractors.

As the DOL, the IRS, the NLRB, and various other federal and state agencies have their own tests for determining independent contractor vs. employee status for various reasons, employers have a keen interest in staying apprised of the developments in this area of employment law.

Who will Benefit:-

  • All Employers
  • Business Owners
  • Company Leadership
  • Compliance professionals
  • Payroll Administrators
  • HR Professionals
  • Managers/Supervisors
  • Anyone Interested in Being Compliant with Current Regulations

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