The Associated Press is reporting that the federal government is aggressively expanding its enforcement actions against businesses that misclassify independent contractors.

What’s Happening?

According to the report, the Department of Labor is signing information-sharing agreements with the IRS and nine states that will help enforcement agents target companies that unlawfully label employees as independent contractors to skirt minimum wage and overtime pay requirements. The DOL has also hired about 300 new agents to investigate wage complaints and has seen a 400% increase in backpay recoveries in recent years.

Noting that the new arrangement could subject employers to penalties from multiple agencies, Patricia Smith, the DOL’s top lawyer, said “There’s more of an incentive to be in compliance because the cost of what we consider to be illegal activity has increased.”

Participating states include Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington, with New York indicating that it plans to join the effort in the future.

The Bottom Line

Now is not the time to run afoul of wage and hour laws. To stay out of trouble, click here for our handy Independent Contractor Checklist and here for a recent Question of the Week addressing this subject.