The U.S. Department of Labor has promised a renewed emphasis on enforcement and important changes to key policies in 2015. The targeted enforcement areas include: (1) federal and state minimum wage and overtime law violations; (2) the classification of workers as independent contractors; and (3) an overhaul of the Fair Labor Standard Act’s overtime exemption for white collar employees. In 2014, President Obama directed the DOL to modernize the FLSA exemptions and the DOL plans to propose the new rules in early 2015. See WageWatch Blog Regarding Proposed Wage & Hour Legislation Also, in the president’s last address, he urged Congress to send him a paid family leave bill and ensure equal pay for women. He also discussed the importance of overtime pay and challenged members again to raise the minimum wage.
The federal and state governments have strengthened enforcement efforts over the past several years. To ensure their aggressive enforcement agenda for 2015, at the federal level, the Obama administration has expanded the number of Wage and Hour Division investigators from 730 to over 1,000.
The DOL considers the hospitality industry as a “fissured” industry and is expected to step up enforcement against hospitality employers this year. Therefore owners, franchisors, franchisees and management companies should be prepared, particularly in the areas of misclassification of employee exemption status and ensuring tipped employees are receiving minimum wage – See WageWatch Blog Regarding Tip Pay. In general, the leisure and hospitality industries are thought to be the biggest perpetrators, however, a significant share of violations are also found in education, health services and wholesale and retail trade industries.
Employers should make sure that their employees’ exemption classification is correct per the DOL guidelines found on their website – www.dol.gov. Ensure that the employees who you have classified as exempt from overtime pay that you have based the classifications on the employee’s actual job duties and not on the job title. The ultimate burden of proof always rests on the employer.
In light of the DOL’s continued focus on investigations and prosecutions of misclassified independent contractors, employers must carefully examine the company’s relationship with its workers. With continued pressure on businesses to remain competitive, subcontracting can be a way to cut costs. However, in some cases employees are being misclassified as independent contractors. Employers should perform self-audits to ensure that ‘independent contractors’ are correctly classified. The key factors are the degree of control and independence of the worker. The more control the employer has over when, where and how the worker performs, the higher the probability that the worker will be deemed an employee. See WageWatch Blog Regarding Independent Contractor Status
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