labor lawAdivision of labor law center

The IRS  and U.S. Department of Labor are cracking down on employers who try to avoid employment taxes by misclassifying employees as independent contractors.

Under IRS regulations, an independent contractor is a self-employed small business person. The employer does not have to pay FICA or unemployment taxes on independent contractors, under federal law. State laws requiring workers’ comp insurance do not apply to independent contractors. Employers are also not required to withhold federal income taxes for independent contractors.

The minimum wage and overtime provisions of the FLSA, the federal Fair Labor Standards Act, do not apply to independent contractors.

All of these factors make hiring independent contractors very attractive to employers. However, both the IRS and the U.S. Department of Labor have stepped up enforcement actions against employers who misrepresent workers as independent contractors, when in fact they are employees.

To further complicate the issue, there is no one standard or group of standards to determine if a worker is an independent contractor, rather than an employee. The IRS has traditionally used the 20-factor test, particularly to determine if workers’ compensation coverage is required.

The IRS 20-factor test basically determines how much control the employer exercises over the worker. In general, a high level of control results in employee status, rather than independent contractor status. When an employer controls when, where or how the work is performed, that usually constitutes employee status.

Other agencies use (more…)

Several features of the $780 billion stimulus plan passed this week will affect how Human Resources professionals perform their jobs in 2009 and beyond.

The goal of the law signed by President Barack Obama on February 17, 2009 is to save or create more than 3 million jobs. The bill, H.R. 1, was developed jointly by the House and Senate.

During negotiation, members of the House and Senate removed all mention of the federal government’s E-Verify system. The initial bill passed in the House would have required that any business receiving funds from the federal government under the stimulus bill use that system to verify that all employees are legally authorized to work in the U.S., using that system.

E-Verify is still required by many states and local governments, and is free to all private employers in the country. All federal contractors will be required to implement E-Verify later this year.

In addition, the stimulus bill requires that any employer receiving aid hire U.S. workers who have been laid off before recruiting and hiring workers from other countries on H-1B visas. This measure is expected to have the biggest impact on IT employees. (more…)

With 2 major hurricanes affecting the Gulf Coast in just 11 days, the US Department of Labor personnel is stretched thin, but responding to demands for assistance, thanks to volunteers from Alabama, Montana, New Mexico, Ohio, South Dakota and Utah.

Initially volunteers from Texas traveled to Louisiana to assist survivors of Hurricane Gustav.  

However, as Hurricane Ike pummeled the Texas coast just days later, most of them returned to their home state to aid in recovery efforts there.

The U.S. Department of Labor’s Employment and Training Administration (ETA) and state and local workforce organizations have (more…)

 The federal government has a number of resources for employers affected by natural disasters.

In just the last two weeks, a number of regions have been struck by hurricanes, floods and other disasters. On September 2, Hurricane Gustav struck Louisiana, resulting in FEMA granting emergency assistance to 24 parishes.

On September 13, Hurricane Ike struck Texas and parts of Louisiana with devastating consequences for Galveston, Houston and other areas.

The storm systems continued north, and by September 14 had caused catastrophic flooding in Vermont, New Hampshire, Maine and parts of the Midwest.

The US Department of Labor has set aside $22.2 million in funds (more…)

 The US Department of Labor has a number of resources in place for Louisiana victims of Hurricane Gustav. Similar programs for survivors of Hurricane Ike in Texas are sure to follow.

So far, the US Department of Labor has announced a $22.2 million national emergency grant  to Louisiana to aid workers displaced by the hurricane. Emergency grant funds are available to employers, small business owners and self-employed workers as well as employees displaced by the natural disaster.

The funds will be used to create more than 4,000 (more…)