The U.S. Department of Labor (DOL) has entered into a series of agreements with the Internal Revenue Service (IRS), as well as several state labor commissioners and other agency leaders, designed to improve departmental efforts to end the business practice of misclassifying employees in order to avoid providing employment protections.

The agreements will enable the DOL to share information and coordinate law enforcement with the IRS and participating states in order to level the playing field for law-abiding employers and ensure that employees receive the protections to which they are entitled under federal and state law.

Coordination Between Federal and State Agencies Aimed at Preventing, Detecting, Remedying Employee Misclassification

According to the DOL, business models that attempt to change, obscure or eliminate the employment relationship are not inherently illegal, unless they are used to evade compliance with federal labor laws—for example, if an employee is misclassified as an independent contractor and subsequently denied rights and benefits to which he or she is entitled under the law. In addition, misclassification can create economic pressure for law-abiding business owners.

For More Information

To read more about these latest enforcement efforts, please click here. Our section on Independent Contractors—How to Classify features important information and tips on how to properly classify your workers.

Topics: Human Resources, Recruitment and Hiring

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