The Department of Labor or DOL released a memorandum last month regarding the misclassification of independent contractors who should be classified as employees. The specific case targets a west coast trucking company who has classified all of its truck drivers as independent contractors. The assistant general counsel of the DOL instructed a regional director to issue a complaint against the trucking company saying that it had “chilled” the truck drivers’ section 7 rights. The company told the truck drivers since they were independent contractors they could not form a union. The response of the DOL provides new insight on misclassification of independent contractors and the length they will go to raise revenue for the federal government at an employer’s expense.
The trucking company in question, a port related trucking company, has already filed bankruptcy. This after a ruling by the California Labor Commissioner found late last year that 38 drivers had been misclassified as independent contractors resulting in $7 million in back wages and penalties. There are several important issues for all San Diego employers who hire independent contractors to notice. This isn’t federal express with thousands of truck drivers, this is an LA company with 38 drivers. That company is now bankrupt due to the decision handed down by the California Labor Board. The second aspect to notice is that the federal government followed closely behind. Even if the company had survived the economic damage inflicted by the order to pay back wages and penalties the feds were next in line.
What does this mean for any San Diego employer with questions about liabilities associated with misclassification of independent contractors or questions of employment? The federal and state employment and labor agencies and the IRS are closely investigating all companies who employ independent contractors. If you seek insight on misclassification of independent contractors or a review of your business strategy to determine if your workers are independent contractors or actually employees call the experienced employer defense attorneys at the Watkins Firm. The cost for misclassification is simply far too high for most businesses to survive. If you are concerned about employee misclassification or the right method for classifying independent contractors we invite you contact us for a free consultation at 858-535-1511.