The Department of Labor Wage and Hour Division and the Virginia Employment Commission have entered into a three year Memorandum of Understanding with the intent to protect employee’s rights by preventing their misclassification as independent contractors and other such ‘non-employee’ terms commonly used in the new world of work.
Already there are 30 states participating in the agreement, making Virginia the 31st state to take part in the misclassification initiative now underway with both the DOL and IRS working with these 31 states to address the issue.
The misclassification and labeling of workers to independent contractors can have an impact on their right to minimum wage, overtime and other related benefits. There are also tax implications and potential lost revenue to federal and state governments as well as potential losses for state unemployment insurance and worker’s compensation funds.
“The MOU represents a new, combined federal and state effort to work together to protect the employees’ rights and level the playing field for responsible employers by reducing the practice of misclassification. Vermont is the latest state agency to join this effort with the U.S. Labor Department. Alabama, Alaska, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Idaho, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Hampshire, New York, Rhode Island, Texas, Utah, Washington, Wisconsin and Wyoming agencies have signed similar agreements.” – David Weil, U.S. Department of Labor Wage and Hour Division Administrator
CXC Global’s focus on global compliance enables us to advise businesses around the globe in the critical areas of worker engagement and classifcation. The new world of work has meant that more companies are now relying on contingent or ‘flex’ workforce for adhoc, project based work. The way that companies engage and attract talent has also changed with the emergence of online and cloud based platforms. Misclassification is a growing focus for governments and we are seeing more attention and assets being allocated to facilitate the crackdown and recoup potential lost revenue.
While engaging a flexible or contingent workforce falls within the framework of the current state and federal laws, companies are advised to ensure their own compliance to reduce their risk of misclassification.
CXC Global is an Independent Contractor Compliance and Engagement expert and can work with your organization to implement a comprehensive IC engagement program which enables enterprise to gain business visibility and control and attract, manage and retain talent (including independent contractors) all while mitigating the risks and streamlining the process.
More information on independent contractor misclassification and the DOL effort to combat it are available at http://www.dol.gov/misclassification/.
Contact one of our global team for more information or complete the contact form below.
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Written by Kathryn Hopkins
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