Is Your Contracted Employee Truly a Contracted Employee?

The headline from the U.S. Department of Labor Homepage read;

"'Labor secretary, IRS commissioner sign memorandum of understanding to improve agencies' coordination on employee misclassification compliance and education.

The memorandum of understanding is an effort to coordinate employment information between the IRS, the US Department of Labor and a growing number of states to assure that employers are compensating employees fairly and equitably. The ultimate goal is to make sure employers are not improperly identifying employees as "independent contractors" to avoid paying minimum wage and overtime. Improper classification of an employee might also be an attempt by an employer to avoid unemployment insurance, federal taxes and workers compensation.

According to Secretary of Labor Hilda L. Solis

The memorandums of understanding will enable the U.S. Department of Labor to share information and coordinate law enforcement with the IRS and participating states in order to level the playing field for law-abiding employers and ensure that employees receive the protections to which they are entitled under federal and state law.

"We're here today to sign a series of agreements that together send a coordinated message: We're standing united to end the practice of misclassifying employees," said Secretary Solis. "We are taking important steps toward making sure that the American dream is still available for all employees and responsible employers alike."

Business models that attempt to change, obscure or eliminate the employment relationship are not inherently illegal, unless they are used to evade compliance with federal labor laws -- for example, if an employee is misclassified as an independent contractor and subsequently denied rights and benefits to which he or she is entitled under the law. In addition, misclassification can create economic pressure for law-abiding business owners.

If you have a question about "contracted" employee classification, give us a call.

Bill,

R. William E. Kruse III

"A rigid economy of the public contributions and absolute interdiction of all useless expenses will go far towards keeping the government honest and unoppressive."

Thomas Jefferson. Exerpt from his letter to Lafayette, 1823

Hauk Kruse & Associates LLC
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Creve Coeur, MO 63141
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