The Department of Labor (DOL) has signed a Memorandum of Understanding with the Internal Revenue Service (IRS) and state labor agencies to collaborate on efforts to enforce action against the misclassification of independent contractors. Several labor and state agencies have also signed memoranda of understanding with the DOL. The memoranda will enable the DOL, IRS, and signatory states to share information and coordinate law enforcement efforts to end the practice of misclassifying employees.
The state labor agencies of Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Utah and Washington, and the state agencies of Hawaii, Illinois, Montana and New York, along with the IRS and the DOL, have increased enforcement efforts for misclassification of employees.
The misclassification of an employee as an independent contractor can create significant issues for employers including liability for unpaid wages, overtime, meal and rest breaks, employee benefits, unemployment contributions, taxes and penalties. And some authorities have challenged the independent contractor status of respondents receiving incentives for participation in marketing research studies.
Survey researchers should remain diligent to designate appropriate classifications for their use of employees and independent contractors.