President Obama’s state of the union address is approaching and as it pertains to employers, it is predicted that he will once again articulate a desire to raise the federal minimum wage requirement. While it is, however, doubtful that a divided Congress would agree to his desire, his pro worker stance serves as a reminder that his administration is going after employers that misclassify workers as either exempt or independent contractors. Such misclassification can subject an employer to liability for millions of dollars in lost wages, punitive damages, and overtime pay. To ensure your company avoids landing on the Department of Labor’s radar, here are important steps for auditing employee classifications:
1) Review Job Descriptions for Exempt Employees. Make sure descriptions are up to date and in compliance with federal and state law.
2) Observe or Talk to Various Exempt Employees. Ensure that the work they are performing matches their job description.
3) Talk to Supervisors. Make sure they are managing their employees regular and overtime hours.
4) Talk to Independent Contractors. Make sure their work and responsibilities are that of an independent contractor and not an employee.
5) Make Adjustments. Based on your observations, interviews, and job descriptions, make revisions and implement new policies and procedures where necessary to ensure compliance with federal and state labor laws.
6) Train Employees and Supervisors. After making revisions, communicate them to your employees so that responsibilities and expectations are clear.
In the last two years, the Department of Labor claims to have collected over $18 million in back wages for thousands of workers misclassified as independent contractors. Many of these employers were also liable under state law. BrightShare Consulting can work with management to audit employee and independent contractor classifications to ensure compliance and reduce liability. For more information or assistance with an audit contact Sonya Madison via email at firstname.lastname@example.org.
The opinions expressed in this article are intended for general guidance only. They are not intended as recommendations for specific situations. Should you need assistance from a BrightShare consultant, please email us at email@example.com.