Minimum wage and overtime laws are often complex and difficult to understand. That is why the US Department of Labor is currently proposing rules that would require employer to disclose to workers how their employee classification is determined. The purpose of the proposed rule-making is to help workers understand their employment status and the protections afforded to them by federal law.
The Fair Labor Standards Act (“FLSA”) Right-to-Know program is critical to protection workers who are often improperly paid as independent contractors. These protections are important because true independent contractors are not entitled to the protections, benefits and compensation requirements of the FLSA. Independent Contractors are also not protected by worker’s compensation and unemployment; therefore, workers who are misclassified as independent contractors will receive significantly less benefits and compensation than they should be provided.
If the Department of Labor’s rule-making is made into law, employers who already are required to analyze whether their workers should be classified as independent contractors or employees would be required to provide that analysis to their employees. This requirement would create significant transparency regarding issues of which, under the current state of the law, most workers are completely unaware.