Misclassified employees to receive overtime benefits

The Department of Labor's Misclassification Initiative is seeking to correct the misclassification of workers as independent contractors that has cost them employee benefits.

A Memorandum of Understanding was signed by the Department of Labor, Internal Revenue Service and Secretary of Labor Hilda L. Solis that included an agreement to share information that can prevent further misclassification incidents, reduce the tax gap and improve FLSA compliance. Efforts to prevent, detect and amend these cases is headed by Vice President Joe Biden's Middle Class Task Force.

State agencies have entered into an agreement with the Department of Labor to reverse employers' misclassifications of employees that denied them benefits, such as overtime pay. California is the newest addition to the group of states that want to preserve employees' rights, including Massachusetts, Colorado, Connecticut, Minnesota, Missouri, Montana, Utah, Washington, Hawaii, Maryland and Illinois.

Employers that  misclassify employees could be in violation of FLSA laws and receive penalties if they are not paying accurate overtime compensation for employees' time and attendance, FICA and unemployment insurance taxes or workers' compensation payments. Businesses that struggle to maintain accurate records internally can use human resource outsourcing to properly maintain employees' paperwork.