Use of Independent Contractors May Be a High Risk Choice if DOL Gets its Way

On July 16, 2015, the U.S. Department of Labor (DOL) Wage & Hour Division Administrator issued “Administrator’s Interpretation 2015-1” (AI) on the application of the Fair Labor Standards Act (FLSA) for identification of workers who are misclassified as independent contractors.  By flatly stating that most workers qualify as employees under the FLSA, this new AI could cause significant misclassification problems for employers, leading to more DOL investigations and enforcement actions and increased private litigation.  Already, commentators are disagreeing about whether the AI restates an existing precedent or breaks new ground.  It is clear, however, that the AI is a one-sided review of the law.  While it remains to be seen how courts will interpret this AI, its very issuance is a strong wake up call for employers who use independent contractors, as undoubtedly more DOL enforcement and private litigation will be on the horizon.

U.S. DOL Proposes Changes to Overtime Rules, Increasing the Number of U.S. Workers who will be Eligible for Overtime.

By Ethan L. Don, Associate

Take Away:  On June 30, 2015, the Department of Labor (DOL) issued a Proposed Rule and Request for Comment addressing some of the most commonly relied on white collar exemptions from the Fair Labor Standards Act (FLSA) overtime pay requirements.  The DOL has proposed to raise the amount of salary a salaried employee needs to be paid to qualify as an exempt employee.  DOL also proposes to raise the salary threshold from its current $100,000 in order to qualify as a highly-compensated employee, exempt from overtime.  The proposed regulations would, for the first time, also make automatic annual increases in both thresholds without the need for new rulemaking. The DOL is also considering and soliciting comments regarding revisions to the duties tests for the white collar exemptions (executive, administrative, professional, computing and outside sales positions).