Our Insights


Misclassification Initiatives Spread As Florida Signs Formal Pact with DOL

Author: Margaret Santen Hanrahan (Atlanta)

Published Date: January 16, 2015

On January 13, 2015, the U.S. Department of Labor’s (DOL) Wage and Hour Division and the Florida Department of Revenue’s General Tax Administration (FDOR) entered into a memorandum of understanding (MOU) in which they agreed to share information on independent contractor misclassification and coordinate law enforcement efforts in this area. The DOL announced that the MOU “represents a new effort on the part of the agencies to work together to protect the rights of employees and level the playing field for responsible employers by reducing the practice of misclassification.”

The DOL’s latest MOU with Florida came less than a month after the DOL announced that independent contractor misclassification would continue to be among its key initiatives in 2015. To help carry its key initiatives, the DOL also increased its number of wage and hour investigators in 2014 from approximately 730 to over 1,000.

In the MOU with Florida, the DOL and FDOR specifically agree to coordinate investigations and other enforcement activities, make referrals to one another of complaints and potential misclassification violations, exchange statistical information on incidences of violations in specific industries and geographic areas, and jointly disseminate outreach materials to the public.

In the past several years, the DOL has entered into similar MOUs with about one-third of the states, including Alabama, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah, and Washington. Information about the MOUs with each of these states can be found on the DOL’s misclassification website.

In light of these significant enforcement initiatives, companies that use independent contractors are well advised to closely evaluate their independent contractor or other non-employee status classifications, preferably under the attorney-client privilege. This is particularly important in light of the continued proliferation of private lawsuits claiming misclassification violations, which can result in personal liability for business owners in certain circumstances, and many of which are pursued on a class or collective action basis. The potential liability associated with these types of misclassification lawsuits can be significant.

Margaret Santen Hanrahan  (Atlanta)

Margaret Santen Hanrahan
Ms. Hanrahan is the co-chair of the firm's Class and Collective Action Practice Group. She focuses her practice on developing winning strategies for the defense of large-scale class and collective actions across the country. While this typically includes the defense of independent contractor misclassification claims, Ms. Hanrahan also has extensive experience defending class and collective actions involving wage and hour issues of all kinds, systemic gender discrimination claims, and various...