Misclassification Costs Employer More than $1,000,000

Yesterday, the Department of Labor announced a settlement by which an employer agreed to pay employees wrongly classified as independent contractors more than $1,000,000 representing back wages and liquidated damages. The employer provided cable, telephone and internet installation services to a local cable company. The employer classified some of the installers as employees while others, performing the same work, were classified as independent contractors. Further, the employer paid all workers based on the pieces of equipment they installed, and did not calculate an hourly rate or pay overtime based upon that hourly rate. The employer also failed to keep records of the number of hours worked and falsified payroll records to minimize the number of hours worked.

The settlement is a reminder that misclassification of employees as independent contractors can be costly. It also suggests that if an employer is going to use both employees and independent contractors to perform services, there should be obvious differences between what and how those services are performed.

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