Independent Contractor Compliance Blog - by Collabrus™

I reported to you recently about Deputy Labor Secretary Seth Harris’ speech in Washington DC, before the Center for American Progress (a liberal, pro labor, research group), where he said his department intends to foster a stronger culture of IC compliance among employers to counter a practice he describes as, “They are playing a dangerous game of catch me if you can, and they are putting workers’ rights, even their lives, at risk…”  He went on to state that “(employers are) “putting…lives, at risk…” and indicated that the DOL will be getting very tough on violators.

It’s no secret that the Department of Labor has been rattling its saber since last summer about getting tougher on IC Compliance. Check out this article:

Department of Labor Tells Congress it Wants to Get Tough on Worker Misclassifications

However, DOL is now leaking more information about proposed, tough regulations being considered.

Deputy Secretary Harris has said that employers will have to put together a plan that is designed to avoid violations of workplace laws…for both IC compliance and for safety and health.  DOL wants to require employers to prepare a plan that will work and it must be implemented before the DOL inspects the business.

The DOL is expecting formal, written plans maintained on file that provide for self-administered compliance programs. The plans must provide for safe guards to insure there is complete compliance with labor laws. The plans must also provide for a periodic self-review to insure they are doing what they were supposed to do and are being followed.

For example:

IC COMPLIANCE:  The DOL expects all employers to self-regulate the proper classification of their employees and independent contractors.  The DOL is indicating it intends to require a written explanation and justification for any individuals who are classified as IC’s.  The written explanation must be provided to the IC’s (with a process to appeal the classification if the worker disagrees).  Documentation must be maintained for the DOL to inspect.  The process must be periodically reviewed to insure it is still being followed and working.

HEATH and SAFETY:  There must be a published plan to avoid safety hazards in the workplace.  The DOL proposal requires the safety plan must be “effective in avoiding violations for risks and hazards to workers.”  An example provided by Harris is for employers to “search the workplace for safety hazards that might injure or kill the workers.”  The DOL is proposing that the employer allow the workers to participate in preparing the plan and to provide them with a copy.  The employer will be required to review the plan periodically to insure it is adhered to and that it is working as intended.  The DOL indicates it intends to review the plan, and its implementation, during inspections of the business.

The Department of Labor intends to raise the risk of being out of compliance.

While this is just a ping to measure reaction, I believe the DOL truly intends to implement harsher IC Compliance requirements.  Deputy Secretary Harris indicated that the maximum fines and penalties, from all applicable codes, will be levied against businesses that do not meet this proposed requirement.

If you have been running your business with an informal qualification process, it may be time to consider a more formal, reliable and proven system of classification (like the one Collabrus provides its clients!) and back up documentation for your contingent workers, especially IC’s.