The Department of Labor (DOL) has launched into a busy summer of action on wage and hour violations. The DOL has indicated that wage and hour issues like worker misclassification, exemption standards, treatment of interns and payment of prevailing wage rates will be areas of increased enforcement and more stringent guidance through the rest of 2015.
State-level governments are partnering with the federal agency to take local action as well. The DOL signed memorandums of understanding with Florida, Wisconsin and Rhode Island to coordinate efforts to crack down on worker misclassification.
Federal contractors have been the particular focus of DOL enforcement actions. In June alone, a Tennessee contractor paid half a million dollars to 204 employees, a California contractor was ordered to pay $92,000 to 27 employees, another California contractor paid almost $100,000 to 58 employees and a Texas contractor was ordered to pay $288,000 to 58 employees as a result of DOL enforcement actions. The payments represent fringe benefits, prevailing wage rates and overtime compensation that these non-compliant contractors failed to provide to employees.
Being out of compliance can result in private action against a company, too. FedEx just reached a $228 million settlement in a class-action lawsuit brought by 2,300 FedEx drivers who claimed they had been misclassified as independent contractors and denied benefits that they would have received as employees. In New York, Ojeda v. Viacom resulted in a $7.2 million settlement for interns in the entertainment industry who were improperly unpaid or paid less than minimum wage.
Changes in compliance standards are coming soon. The DOL has announced plans to release an Administrator’s Interpretation to more clearly define the difference between an independent contractor and an employee under the Fair Labor Standards Act (FLSA). And before the end of June, the DOL is expected to publish a proposed rule to revise exemption standards under the FLSA, clarifying what criteria employees must meet to be classified as exempt or non-exempt. Employers may have to make hard choices when analyzing the business impact of the Administrator’s Interpretation and the proposed rule, which experts predict will make radical changes to current standards.