Posts Tagged ‘N.C employers’

Eight Things N.C. Employers Need to Know About the U.S. Department of Labor

Thursday, March 31st, 2011

Albert Bell, Jr., Attorney at Law with Ward and Smith, P.A., advised participants in CAI’s recent members-only Ask the Experts session on the U.S. Department of Labor’s (USDOL) stepped-up enforcement and pro-labor approach, and highlighted areas that can present problems for employers.

Some of the key points in the presentation included:

  1. Increased collections for wage and hour violations – In 2009, the government collected more than $172 million in back wages for 219,560 employees.
  2. Increase in wage and hour investigators – There was an increase of 250 investigators in 2010, and USDOL is projecting that they will have 1,000 investigators by the end of 2011.
  3. Focus on employees – Protecting the rights of employees is the priority for USDOL.  In December 2010, it established a partnership with the American Bar Association to provide a toll-free number to employees to refer them to a private attorney in their area whom they may contact to discuss a complaint.  For more information, see http://bit.ly/dol-aba.
  4. USDOL is less helpful to employers – Employers used to be able to write letters to the USDOL explaining a situation and asking for guidance. The USDOL would then respond with an Opinion Letter to the employer but would post the Opinion Letter anonymously on the Web.  These Opinion Letters were helpful to employers in understanding USDOL interpretations of laws.  In 2010, the USDOL started issuing Administrator Interpretations and eliminated the Opinion Letter process.  The Administrator Interpretations address general interpretation of the law rather than specific situations.  The USDOL also withdrew some prior Opinion Letters.
  5. Hot Fair Labor Standards Act (FLSA) issues – Rounding of time, and donning and doffing are areas that plantiffs’ attorneys are focusing on because of the number of employees affected and the resulting potential gold mine.
  6. Strategy for 2011-2016 – The emphasis is on Plan/Prevent/Protect.  USDOL plans to propose regulations requiring employers to put systems in place to address risks, hazards and inequities in their workplaces and correct deficiencies to be compliant with the FLSA.  It is expected that once the USDOL outlines the regulations for this process, they will conduct audits to see that employers have the systems in place, rather than auditing just for specific violations of the FLSA.
  7. Proposed recordkeeping rule in 2011 – USDOL intends to publish a rule in 2011 requiring employers to notify employees of their rights under FLSA and how their hours and pay are determined.
  8. Employees you don’t know you have – Employers should revisit independent contractor classifications to make sure they truly are independent contractors and not employees.  To determine whether someone is an independent contractor or employee the USDOL considers who has control, the opportunity for profit and loss, investment, skill and permanency of the relationship.

For additional information on the current initiatives of the USDOL, please call a member of CAI’s Advice and Counsel team at (919) 878-9222 or (336) 668-7746.

Photo Source: 4nitsirk

Ten Things N.C. Employers Need to Know About Independent Contractors and Joint Employment

Tuesday, December 14th, 2010

Gretchen Ewalt from the Ogletree Deakins law firm shared her expertise on Employee Classification (Employee or Independent Contractor) and Joint Employment at CAI’s October members-only Ask the Expert. Participants left the sessions with a number of recommendations that, if implemented, will limit their organization’s exposure to costly litigation and potential penalties.

Below are some of the points covered in these sessions.

1. Independent Contractor Tests. There are a number of factors considered by the IRS and the USDOL in determining if a worker is an independent contractor or an employee.  A brief description of a true independent contractor is as follows:

  • The employer does not control the means and manner of how a project is performed, only specifying the expectations of the end result.
  • The “contractor” has a viable business concern, having the opportunity to make a profit or suffer a loss, and provides the same services to other employers.
  • The “contractor” absorbs expenses incurred during the project.

2. Penalties for Misclassification. Penalties for misclassifying an employee as an independent contractor include state and federal tax liabilities, as well as back pay for wage and hour overtime violations.

3. Conduct Internal Audits. It is recommended that periodic internal risk analysis audits be conducted to ensure that independent contractors are properly classified.

4. Draft Independent Contractor Agreements. Contracts for independent contractors should be drafted by legal counsel establishing expectations by both parties to clearly show that the independent contractor relationship exists.  Language also needs to be included stating that the contractor waives and relinquishes any rights to the client’s benefit plans and that the contractor agrees to comply with all business/industry standards.

5. Educate Managers and Supervisors. Managers and supervisors should know the difference between an employee and an independent contractor and understand the liabilities incurred due to misclassification.

6. Definition of Joint Employment. A condition where an individual is providing services that jointly benefits two or more employers.

7. Joint Liability. Employers that utilize employees from an outsourcing agency can be held liable along with the agency for complaints filed by those employees with state and federal regulatory bodies.

8. Time Credited for FMLA. The time spent by an outsourcing agency’s employee providing services to a client employer is credited toward FMLA eligibility if that employee is employed as a regular employee by the client employer.

9. Outsourcing Agreements. Agreements with outsourcing agencies should be carefully drafted by legal counsel to ensure that the agency is responsible for taxes, insurance, business licenses and all employment matters, including employee training, disciplinary actions, compensation/benefit programs and maintenance of personnel files.

10. Contract with Reputable Agencies. Make sure that your outsourcing agency complies with all applicable laws and specify such compliance in the outsourcing agreement.  Ensure that their personnel policies/procedures are sound and that their managers are well equipped to effectively deal with agency employee complaints.

If you have questions about employee classification or joint employment, please contact a member of CAI’s Advice and Counsel team at 919-878-9222 or 336-668-7746.

Photo Source: University of Waterlo