EMPLOYER’S PAYROLL SYSTEM MUST BE OVERHAULED, TOO

The Dept. of Labor (DOL) usually settles violations by issuing fines and telling companies to fix problems.

But occasionally it goes further. And instead of following up with the employer directly, it gets others to keep DOL officials in the loop.

That recently happened with a Massachusetts-based construction company, Force Corp.

A DOL investigation discovered the company evaded overtime payments by misclassifying workers as independent contractors.

In addition to rectifying the situation by paying $2,359,685 in back wages and damages, the DOL ordered the company to overhaul its payroll system s with the help of independent consultants. As part of that new system, these consultants will reports back to the DOL every quarter—including telling the agency about any further problems and what steps are needed to fix them.

Misclassification is costly

Mistakes classifying employees can come with more consequences than fines. It can put a company in the DOL’s sights for years to come.

Work with HR to make sure independent contractors at your company are meeting requirements—and wouldn’t be considered employees by the DOL.

One slip up could undo any good will you may have with regulators otherwise.

Cite: www.dol.gov/whd/regs/compliance/whdfs13.htm