A news release from the The Department of Labor highlights the findings of an investigation into violations of overtime and record keeping provisions of the Fair Labor Stands Act (FLSA) against Planet Direct Mail. Planet Direct Mail was forced to pay $355,672 in back wages and damages to 73 employees plus extensive penalties. The Department of Labor’s investigation found that the company classified some production employees as independent contractors and failed to pay them necessary overtime wages.
Are you classifying your workers correctly? This is a growing concern for any company that employs people outside of the traditional labor model. The Department of Labor reports that currently 1 in 10 people work as independent contractors or freelancers; that number is expected to continue to grow. However, employers need to know and understand the laws and regulations that pertain to classifying the work, wage restrictions and other nuances in the FLSA in order to avoid violations and penalties.
According to Andy Bishop, VP – Resource Management at IPM, he is receiving more and more questions from other employers about the nuances of worker classification. “The trend of more freelance employment in the workforce is obvious. However, many employers are learning they can’t simply call a worker an Independent Contractor and yet still have that person function as a traditional employee. The laws are not set up to work that way and employers must be very careful when classifying their employees to avoid significant penalties.”
Working with a third-party contingent labor provider like IPM is the first step to correctly managing these changing workforce trends. Our clients count on us to properly classify their workforce and to help them efficiently manage non-traditional workers like independent contractors.