As seen in yesterday’s Advisor, the determination of independent contractor status can be tricky. Today: DOL’s top contractor problem spots, and a guide that picks up your FLSA problems before the feds do.
The U.S. Department of Labor (DOL) points out the following particular problem areas for employers when it comes to determining whether a worker is an employee and, thus, is eligible for protections under the Fair Labor Standards Act (FLSA), or is an independent contractor, and therefore not covered under the FLSA. (And note that when DOL identifies problem areas, that usually means they’re keeping a keen eye on anyone in these situations.)
1. Construction. DOL notes that in the construction industry, many builders hire “so-called independent contractors,” who in reality should be considered employees because they do not meet the government’s tests for independence (see yesterday’s Advisor).
2. Franchises. Franchise arrangements can pose problems in the independent contractor arena as well. Depending on the level of control the franchisor has over the franchisee, workers may be considered to be employed.
3. Volunteers. A person employed by a for-profit organization cannot “volunteer” to perform the same services he or she performs as an employee. (Of course, DOL says, individuals may volunteer their services to religious, public service, and nonprofit organizations without contemplation of pay, and not be considered employees of such organizations.)
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4. Trainees. Trainees, interns, or students may also be employees, depending on the circumstances of their activities for the employer. Are they doing the same work that regular employees do, as opposed to tasks that help them learn? They might then be considered employees.
5. Homeworkers. People who perform work in their own homes are often improperly considered to be independent contractors. FLSA covers such home workers as employees, and they are entitled to all benefits of the law.
So how independent are the “contractors” who work for you? And while we’re at it, how “exempt” are your low-level exempt employees? And how about your “volunteers?” Are they really employees? In other words, how many FLSA violations exist at your workplace?
Bottom Line: Audit Before They Do
“They,” in this case, might be the feds, lawyers, or even bankers deciding you don’t get that needed loan because improperly classified workers represent a huge potential liability.
In fact, experts say that it’s always better to do your own audit, and fix what needs fixing, before authorities order you to do so. And most employers would agree, but they then get bogged down in how to start and in the end, they do nothing. There are, however, aids to making FLSA self-auditing relatively easy.
One our editors strongly recommend is BLR’s FLSA Wage & Hour Self-Audit Guide. It is both effective and easy to use and even won a publishing award in that regard. Here’s what customers like about it:
—Plain English. Drawing on 30 years of experience in creating plain-English compliance guides, our editors have translated the FLSA’s endless legalese into understandable terms.
–Step-by-step checklists. The book opens with a clear narrative of what FLSA is all about. That’s followed by a series of checklists that utilize a simple question/answer pattern about employee duties to find the appropriate classification.
All the checklists you need to avoid exempt/nonexempt classification and overtime payment errors. They’re in BLR’s award-winning FLSA Wage & Hour Self-Audit Guide. Try it for 30 days. Click here
–Complete. Many self-audit programs focus on determining exempt/nonexempt status. BLR’s also adds checklists on your policies and procedures, and includes questioning such practices as whether your break time and travel time are properly accounted for. Nothing falls through the cracks because the cracks are covered.
–Convenient. Our personal favorite feature: A list of common job titles marked “E” or “NE” for exempt/nonexempt status. It’s a huge worksaver.
–Up to date. If you are using an old self-auditing program, you could be in for trouble. Substantial revisions in the FLSA went into effect in 2004. Anything written before that date is hopelessly—and expensively—obsolete. BLR’s FLSA Wage & Hour Self-Audit Guide includes all the changes.
You can examine the BLR FLSA Wage & Hour Self-Audit Guide for up to 30 days at no cost or obligation. Click here and we’ll be glad to arrange it.