Business Owners Should Review Their Policies in Light of DOL Announcement

The U.S. Department of Labor (DOL) recently announced it will hire an additional 100 investigators to support its Wage and Hour Division, which is responsible for the enforcement of several federal employment laws, including the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA).

In light of the DOL’s push to hire more workers to enforce FLSA and FMLA regulations, employers may wish to review their employment policies, including independent contractor classification, exempt worker categorization, and FMLA policies and procedures.

Independent contractor misclassification

During their investigations, the DOL will likely consider employers who have improperly classified workers as independent contractors instead of employees. The U.S. Supreme Court has on several occasions indicated that there is no single rule or test for determining whether an individual is an independent contractor or an employee for purposes of the FLSA. However, the DOL states there are other factors which the court considers significant including:

• The extent to which the services rendered are an integral part of the principal's business;
• The permanency of the relationship;
• The amount of the alleged contractor's investment in facilities and equipment; and
• The alleged contractor's opportunities for profit and loss.

Exempt or non-exempt status

Along with independent contractor classifications, the DOL will likely examine if an employer has properly categorized workers as exempt or non-exempt.

Under the FLSA, exemption status is determined after a detailed analysis of duties related to the job; the job’s title is not enough to determine exemption status.

Employers should review the exemptions under the FLSA to ensure they have properly categorized positions. The Fact Sheet for Executive, Administrative, Professional, Computer, and Outside Sales Employees under the FLSA can be found by clicking on this link.

Employers face the prospect of liability for years of unpaid overtime and fines in cases where employees are mistakenly classified as exempt. In addition, employers may also wish to examine their FMLA policies to make sure they are following the law’s requirements.

Help is available

The business attorneys at O’Reilly Rancilio are available to help employers review their policies. To speak to an attorney, please call 586-726-1000 or visit our website.