Misclassification of Independent Contractors

According to the U.S. Department of Labor, the misclassification of employees as independent contractors presents one of the most serious problems facing affected workers, employers and the entire economy. Misclassified employees are denied critical benefits and protections to which they are entitled, such as the minimum wage, overtime compensation, family and medical leave, unemployment insurance, and safe workplaces. Moreover, employee misclassification generates substantial losses to the federal government and state governments in the form of lower tax revenues, as well as to state unemployment insurance and workers’ compensation funds. Individual taxpayers are hurt by this practice. Video: Am I an Independent Contractor or an Employee?

Misclassification of Workers as "Independent Contractors"

Of the principal objectives of most American companies, cutting costs and increasing profits rank high on the list. In their attempts to cut costs, many companies today are classifying their workers as “independent contractors” as opposed to “employees.” This classification eliminates such costs as: overtime pay, health insurance, social security benefits, workers compensation insurance – the list goes on. In addition, workers who are classified as independent contractors have no protection from numerous worker rights statutes. Recently, the U.S. Department of Labor filed an action in U.S. District Court, Middle District of Florida against Caring First, Inc. under the Fair Labor Standards Act. The lawsuit contends that Caring First, Inc. misclassified certain of their employees, including their licensed practical nurses and registered nurses, as “independent contractors” and paid them a flat hourly rate, regardless of the number of hours worked per week. Simply put, this lawsuit alleges that Caring First classified nurses as independent contractors to avoid paying them overtime as is required by federal law. Research indicates that this action is widespread.