Threatens to Require FLSA Coverage for
Traditional Independent Contractors
States Department of Labor's ("DOL")
proposed rule, promulgated in response
to President Barack Obama's March
2014 Executive Order, that increases
the standard salary level required for
the Executive, Administrative and
Professional "EAP" or "white collar"
exemption under the Fair Labor
Standards Act ("FLSA") from $455 a
week ($23,660 for a full-year worker),
to $970 per week ($50,440 per year).
After all, it is estimated that over five
million, currently exempt, salaried
employees will be entitled to overtime
pay if the Rule becomes final. However,
the DOL's recent position
Permit" employment definition has the
potential, if upheld, to include coverage
for as many or more individuals, who
may otherwise be deemed independent
contractors.
As of 2005, there was an estimated
10.3 million independent contractors
working in the U.S.
as independent contractors.
intentionally misclassifying employees
to cut costs associated with workplace
protections such as minimum wage,
overtime compensation, unemployment
insurance and workers' compensation.
In addition, misclassification results in
lower tax revenues for the government
and creates an uneven playing field for
employers who properly classify their
workers.
On July 15, 2015, DOL Adminis-
trator David Weil issued his Admin-
istrator's Interpretation No. 2015-1
("Interpretation No. 2015-1"). The
DOL related that it continues to receive
numerous complaints from workers
alleging misclassification and continues
to bring successful enforcement actions
against employers who misclassify. It
has pursued a multi-pronged approach,
entering into memoranda of understand-
ing with many states and the Internal
Revenue Service, in an effort to share
information to combat misclassification.
to provide "additional guidance" to
the regulated community in classifying
workers and to curtail misclassification.
ers to pay time and a half to employees
who work over 40 hours in a given work
week.
individual employed by an employer."
including "any person acting directly or
indirectly in the interest of an employee
in relation to an employee...."
or permit to work."
that the FLSA's "employ" definition is
broad and is derived from child labor
statutes.
comprehensive enough to require
its application to many persons and
working relationships, which prior to
this Act, were not deemed to fall within
an employer-employee category.'"
experience. He is a shareholder with O'Meara, Leer, Wagner & Kohl,
P.A., where he chairs the firm's employment and labor law section.
He is a frequent lecturer and author on a variety of employment
law topics, including background investigations, employee
misclassification, investigating complaints of discrimination, ADA
and FMLA updates, and retaliation claims. He is a member of
Primerus' Labor and Employment Executive Committee.
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