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Misclassifying employees can lead to penalties

Federal regulators continue to scrutinize the practice of misclassifying people as independent contractors when they should be statutory employees. A string of decisions from the National Labor Relations Board should alert employers in New York to the importance of meeting legal standards when classifying workers. A recent memorandum addressing the problem called one employer's designation of truck drivers as contractors an impediment to the workers' ability to exercise their Section 7 rights under Section 8(a)(1).

In addition to potentially inflicting unfair labor practices, an employer that wrongly calls workers independent contractors could face scrutiny from the Department of Labor and Internal Revenue Services. Regulators could impose civil penalties, and the IRS could charge the employer for unpaid payroll taxes. An employer involved in an investigation by federal regulators could incur legal fees on top of other penalties.

Violations of employment law often occur when an employer wants to avoid paying overtime wages or providing benefits like health insurance or retirement account contributions. Independent contractors typically do not have access to these rights that are given to hourly employees.

A person who is considering a job as an independent contractor could discuss their situation with an attorney to see if their potential duties meet the criteria for the employee classification. This information could be important before the person enters into an employment contract. If the person already works under this classification and believes that it is inappropriate, then the attorney could communicate the complaint to the employer. This action could include a request for back pay and benefits. If a lawsuit becomes necessary, then the attorney could gather evidence and represent the person in court.

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