Locke Lord’s Independent Contractor Misclassification and Compliance team helps companies avoid, minimize, or defeat legal challenges to the valid use of independent contractors and other types of contingent workers. Members of our practice team in our labor and employment practice have been active in this area for over 10 years, dedicated to advising businesses on how to enhance compliance with federal and state independent contractor laws and defending companies caught in the misclassification crackdown.
In the area of independent contractor compliance, our approach to provide a customized and sustainable solution for each client with the objective of helping organizations in their efforts to lawfully use independent contractors consistent with applicable laws and to minimize the likelihood of future legal challenges. Few industries are immune from such legal challenges, and our lawyers have represented clients in independent contractor compliance matters in dozens of diverse industries.
Many of our team members are labor and employment litigators who have experience in defending organizations, both large and small, that are facing misclassification claims brought in judicial or administrative proceedings and audits by governmental agencies and private class action lawyers throughout the United States.
The Current Landscape: Regulatory and Judicial Crackdown on Misclassification of Employees as Independent Contractors
Responding to mounting evidence that many companies across the nation have misclassified employees as 1099 contractors to save the costs associated with employment taxes and benefits, state labor departments and federal agencies have taken aim at companies believed to be misclassifying employees. While the U.S. Department of Labor, has recently taken steps to de-emphasize its prior crackdown on independent contractor misclassification, it remains committed to enforcing federal wage and hour laws against companies regarded by federal regulators as denying rights to workers who have been misclassified as independent contractors. Class action plaintiffs’ lawyers, meanwhile, have intensified their efforts to target large- and medium-size companies with an ever-increasing number of class action lawsuits alleging independent contractor misclassification.
In addition, state legislatures, often at the behest of unions, have been active in seeking to curtail the use of independent contractors by changing the legal tests for determining who is an employee and who is an independent contractor, increasing the penalties for misclassifying employees as independent contractors, and establishing task forces to coordinate enforcement efforts.
Companies that use independent contractors now have an even greater need to examine closely the structure, documentation and/or implementation of their business models and to take action to enhance their independent contractor compliance and minimize or eliminate their exposure to misclassification liability.
Our Practice Team
Members of our Independent Contractor Misclassification and Compliance Practice team have conducted numerous seminars and presentations and written more than two dozen articles for legal and business publications dedicated to the issue of independent contractor compliance and misclassification, including how to enhance compliance with laws permitting the use of independent contractors, conduct due diligence into companies that use 1099 contractors, minimize independent contractor misclassification liability, and other matters of vital interest to organizations that make use of independent contractors and other types of contingent workers.
Our team members have been quoted in The New York Times, The Washington Post, The Los Angeles Times, Forbes, American Bar Association Journal, and numerous Bloomberg, BNA, Law 360, and Thomson Reuters publications, as well as many other leading business and legal publications on the subject of misclassification of independent contractors.
Since 2007, the lawyers on our team have handled independent contractor compliance and misclassification matters for more than 60 clients headquartered in more than two dozen jurisdictions including Arizona, California, Connecticut, District of Columbia, Florida, Indiana, Iowa, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Oregon, Pennsylvania, Puerto Rico, Texas, Utah, Virginia, and West Virginia. The breadth of our lawyers’ experience in this field of law is reflected in the scope of our representative engagements, some of which are listed below.
Richard Reibstein (New York) and Buddy Sanders (Houston) secured a favorable determination from the IRS that a national group fitness client qualified for Section 530 safe harbor relief in connection with the client’s treatment of its trainers as independent contractors paid on a Form 1099 basis.