Wage and Hour

Governor Patterson Signs Wage Theft Prevention Act

December 15, 2010

By Subhash Viswanathan

On Monday, December 13, 2010, Governor Patterson signed the Wage Theft Prevention Act, which broadens greatly the Department of Labor’s enforcement powers, imposes new and expanded notification requirements on employers, and increases significantly employers’ potential liability for violations of the Labor Law. A summary of the major changes, which take effect on April 12, 2011, is provided below.

Notice Requirements

The Act makes significant changes to section 195 of the Labor Law by requiring employers to provide even more information to employees, both upon hire and on or before February 1 of each following year. Required information now includes, among other things: pay rates, basis of pay rate, how the employee will be paid (e.g., hour, shift, week, salary, etc.), any allowances claimed as part of the minimum wage, the regular pay day, and “such other information as the commissioner deems material and necessary.” Employers must provide this documentation in both English and in the employee’s primary language and maintain accurate records for six years. The Commissioner of Labor will establish dual-language templates for purposes of complying with these changes.

Failure to provide notice as required by section 195 within ten business days of the employee’s first day of employment allows either the Commissioner or the employee to bring an action to recover damages of $50 for each work week that the violation occurred, plus costs and reasonable attorney’s fees. Damages recoverable for prevailing employees are capped at $2,500. No such maximum applies for actions brought by the Commissioner.
 

Wage Statements

Section 195 is further amended to require employers to provide employees with a detailed wage statement with every payment of wages. Required information includes, among other things: the dates of work covered by that payment, the rate and basis of pay (e.g., whether by hour, shift, week, salary, etc.), and any allowances claimed as part of the minimum wage. For non-exempt employees, employers must also provide the employee’s regular hourly rate, overtime rate, the number of regular hours worked, and the number of overtime hours worked.

The Act allows both employees and the Commissioner to bring legal action for failure to provide such information. Damages include $100 per week for each week the violation occurs, not to exceed $2,500 for employee-initiated legal action, plus costs and attorney’s fees.

Liquidated Damages

Another significant change to the Labor Law is the increase in available liquidated damages. Previously, an employee who prevailed in a court action alleging a failure to pay wages received the total amount of the underpayment, costs, attorney’s fees, and, in some instances, liquidated damages equal to 25% of the underpayment. As amended, section 198.1-a now permits a prevailing employee to recover payment of all wages due, costs, attorney’s fees, prejudgment interest, and (unless the employer proves a good faith basis to believe the underpayment was lawful) liquidated damages equal to 100% of the total wages due.

Anti-Retaliation Protection

Several key changes to the Labor Law’s anti-retaliation protections have been made, such as requiring “any person” found to have engaged in unlawful retaliation to pay liquidated damages of up to $10,000, along with costs and attorney’s fees. In addition, retaliation is now listed as a class B misdemeanor.

While the Act does not take effect until next April, employers should begin reviewing their payroll practices to determine what they will have to change to comply with the new notice and wage statement requirements.

 

New York\'s Construction Industry Fair Play Act Takes Effect

October 28, 2010

By Subhash Viswanathan

Last month we posted on several bills signed into law by Governor Paterson in late August, one of those is the Construction Industry Fair Play Act, which applies to construction industry contractors in New York and is designed to deal with the problem of worker misclassification in that industry. Among other things, the Act creates a presumption that workers in the industry are employees, not independent contractors, unless three statutory criteria are met. The Act, which went into effect Tuesday, also provides for fines and criminal penalties for willful misclassification of employees. The New York State Department of Labor has issued a fact sheet explaining the statute. The Agency has also issued a poster which construction industry employers must display in a “prominent and accessible place on the job site.”

Jury, Not Court, Determines Whether An Entity Is A Joint Employer Under The FLSA

September 15, 2010

Almost seven years ago, in Zheng v. Liberty Apparel Co., the Second Circuit Court of Appeals created a six factor test for assessing when businesses are liable as "joint employers" under the Fair Labor Standards Act (FLSA) for violations committed by their subcontractors. The Second Circuit held that, depending on the case, the following factors should be reviewed in determining joint employer status: (1) whether the workers work exclusively or predominantly for the purported joint employer; (2) the permanence or duration of the working relationship; (3) whether the purported employer’s premises and equipment are used by the workers; (4) the extent of control the putative joint employer exercises over the workers; (5) whether the outsourced workers can be considered an integral part of the business; and (6) whether the workers have a business organization that could shift as a unit from one putative joint employer to another. The Court also found that industry custom and historical practice could be considered to differentiate between legitimate subcontracting relationships and subterfuges intended to evade the FLSA.

The Second Circuit sent the case back to the District Court and, eventually, the case went to trial before a jury. At trial, the primary issue was whether the Liberty Defendants were plaintiffs' "joint employer" for purposes of the FLSA and analogous state law claims. The jury returned a verdict in favor of plaintiffs, and, following resolution of various post-trial motions, the District Court entered judgment accordingly. Liberty appealed that judgment, contending that the District Court, rather than the jury, should have determined whether it was the plaintiffs' joint employer. Recently, the Second Circuit affirmed, holding that the trial judge did not err in allowing a jury to decide the mixed question of law and fact as to whether Liberty was the plaintiffs' joint employer. Although Liberty argued that the lower court should have used a special verdict form allowing the judge to apply the six-factor test to the jury's factual findings, the Second Circuit said “such a rule would distort the jury's proper role” of applying law to fact.

The Second Circuit’s recent decision serves as a healthy reminder to employers who subcontract or outsource a portion of their business that they should carefully review such relationships to minimize the risk of potential FLSA liability.

A version of this post appeared previously on the Wage and Hour Defense Institute blog.
 

Governor Patterson Signs Several New Pieces of Legislation Affecting New York Employers

September 9, 2010

By Subhash Viswanathan

The end of August was a busy time for Governor Paterson who acted on 90 pieces of pending legislation. Several of those laws will have an impact on employers across the State. Below is a brief summary of the new laws.

Domestic Workers Bill of Rights

By signing the “Domestic Workers Bill of Rights” Governor Paterson made New York the first state to have such a law. When he signed the legislation, Governor Paterson remarked that: “Today we correct an historic injustice by granting those who care for the elderly, raise our children and clean our homes the same essential rights to which all workers should be entitled.” The law, which takes effect November 29, 2010, defines a protected domestic worker as a “person employed in a home or residence for the purpose of caring for a child, serving as a companion for a sick, convalescing or elderly person, housekeeping, or for any other domestic service purpose.” Excluded from the definition are persons who: work on a casual basis; provide companionship services and are employed by someone other than the family or household for which the services are provided; and relatives by blood, marriage or adoption of the employer or of the person for whom the worker is providing services under a program funded by a federal, state or local government. Among other things, the law provides the following protections and benefits for covered domestic workers:

1)  the right to overtime pay at time and a half after 40 hours of work in a week, or 44 hours for workers who reside in the employer’s home;

2)  one day of rest every seven days, or overtime pay if it is waived;

3)  three paid days of rest annually after one year of work;

4)  the removal of the domestic workers exemption from the Human Rights Law, and the creation of a special cause of action for domestic workers who suffer sexual or racial harassment; and

5)  the extension of statutory disability benefits to domestic workers, to the same degree as other workers.
 

Bereavement And Funeral Leave For Same-Sex Partners

Another bill signed by the Governor requires that employers who provide leave for the death of an employee's spouse or the child, parent or other relative of the spouse, must provide the same leave to an employee for the death of the employee's same-sex committed partner or the child, parent or other relative of the same-sex committed partner. The law, which is effective October 29, 2010, defines same-sex committed partners as “those who are financially and emotionally interdependent in a manner commonly presumed of spouses.”

Construction Industry Fair Play Act

Finally, in an effort to respond to the issue of employee misclassification in the construction industry, Governor Paterson signed the Construction Industry Fair Play Act, which takes effect on October 29, 2010. The Act creates a presumption that any person performing services for a construction contractor is an employee, not an independent contractor. The presumption can only be rebutted if the person satisfies the requirements to be classified as a separate business entity, as defined by the Act, or the person meets the following criteria which establish independent contractor status:

1)  the individual is free from control and direction in performing the job, both under his or her contract and in fact;

2)  the service must be performed outside the usual course of business for which the service is performed; and

3)  the individual is customarily engaged in an independently established trade, occupation, profession, or business that is similar to the service at issue.

In addition, and for the first time in New York State history, the Act imposes monetary and criminal penalties on construction industry employers that willfully misclassify employees.

Governor Paterson did veto several piece of legislation that would have affected employers across the state, including one which would have mandated that employers excuse the absence/lateness of an employee if such absence/lateness was due to the fact that the employee was responding to an emergency as either a volunteer ambulance worker or volunteer firefighter.

There are several pieces of employment-related legislation the Governor has not yet acted on. We will follow and report on those if and when the Governor signs them.
 

New York State Department of Labor Adds Counsel Opinion Letters to Website

August 18, 2010

By Subhash Viswanathan

The New York State Department of Labor recently added to its website opinion letters written by its Counsel’s Office. The Counsel's Office provides legal advice and counsel to the Commissioner of Labor and to programs within the Department. The opinion letters are primarily responses to requests for advice submitted by employers. All the letters are text-searchable.  They cover three general topics: wage and hour law, public works projects and the State Worker Adjustment and Retraining Notification Act (“WARN”). The wage and hour law letters span a wide variety of topics from blood donation leave and accommodations for nursing mothers to employment classifications, independent contractor issues, meal and rest periods, overtime, and wage deductions under Labor Law Section 193. The public works projects letters deal with state requirements for payment of the prevailing wage (the local union wage) by private employers performing work on public works projects. Most of those letters address whether the prevailing wage law applies to particular types of work. There are only a few opinion letters related to WARN, which is not surprising because the statute and its implementing regulations are still relatively new. Interestingly, none of the letters made publicly available predate 2007, the first year of a newly elected Democratic administration.

Break Time For Nursing Mothers Under the FLSA - Balancing Obligations Under New York Law With New Federal Requirements

July 23, 2010

By John M. Bagyi

Yesterday, the US Department of Labor issued a fact sheet  that provides general information on the break time requirement for nursing mothers, part of the Patient Protection and Affordable Care Act which took effect March 23, 2010. While these amendments to the Fair Labor Standards Act (FLSA) represent a significant change for employers in many states, since 2007, New York employers have been required to provide reasonable unpaid break time, or permit employees to use paid break time or meal time, to express breast milk. See our earlier posts on New York's requirement.

Thus, for New York employers, the most important observation contained in the US DOL's fact sheet is that the FLSA requirement of break time for nursing mothers to express breast milk does not preempt State laws that provide greater protections to employees. New York's protection of nursing mothers provides employees with a number of protections that exceed those provided under the new federal law. For example, New York law protects expression of breast milk up to three years following the birth of the child (federal law is limited to one year) and applies to all employers (federal law does not apply to employers with fewer than 50 employees).

Given that New York's protection of nursing mothers provides greater protection than the recent FLSA amendments, employers complying with existing New York law will be in compliance with the new federal law as well.

 

Second Circuit Finds Pharmaceutical Sales Reps Not Exempt Under FLSA

July 16, 2010

By Katherine R. Schafer

On July 6, 2010, the Second Circuit Court of Appeals held that pharmaceutical sales representatives employed by Novartis Pharmaceuticals Corp. (“Novartis”) are not exempt from the overtime pay requirements of the Fair Labor Standards Act (“FLSA”) as either “outside sales” or “administrative” employees. In so doing, the Court determined that the Secretary of Labor’s interpretations of the regulations promulgated under the FLSA defining “outside sales” and “administrative” employees, as set forth in the Secretary’s amicus brief , were entitled to “controlling” deference.

The Second Circuit rejected Novartis’ argument that its sales reps “made sales” within the meaning of the “outside sales” regulations because the reps only promoted a drug to a physician. They could not lawfully take an order for its purchase or obtain a binding commitment from the physician to prescribe the drug to a patient. While the sales reps provided physicians with free samples, Novartis sold its drugs to wholesalers, which then sold them to pharmacies, and the pharmacies ultimately sold the drugs to the patients who had prescriptions for them. Accordingly, since the sales reps did not “make sales,” they were not “outside salespeople” within the meaning of the FLSA and the regulations.
 

The Court also agreed with the Secretary of Labor that the sales reps were not “administrative” employees under the FLSA because the marketing skills “gained and/or honed” through Novartis training sessions did not demonstrate that the sales reps were “sufficiently allowed to exercise either discretion or independent judgment in the performance of their primary duties.”

Writing for the Court, Judge Amalya L. Kearse acknowledged that a number of federal district courts have held that pharmaceutical sales reps are exempt under the outside sales and/or administrative exemptions, but responded that “[t]hose cases are, of course, not binding on us, and their reasoning does not persuade us that the Secretary’s interpretations of the regulations should be disregarded.” Judge Kearse added, “[t]o the extent that the pharmaceuticals industry wishes to have the concept of ‘sales’ expanded to include the promotional activities at issue here, it should direct its efforts to Congress, not the courts.”
 

Make Sure Your Unpaid Interns Are Not Employees

May 6, 2010

By Subhash Viswanathan

As summer nears, employers may be asked by college students about unpaid internship opportunities. Unpaid internships frequently benefit both the employer and the student. The student gains real-life experience, resume enhancement, networking opportunities, and perhaps a step toward a paid position after graduation. The employer has a low cost opportunity to evaluate a potential applicant. But employers must exercise caution in the way the internship program is set up and in the functions the intern performs.

The U.S. Department of Labor (“DOL”) recently issued a new Fact Sheet reminding employers that unpaid interns may be “employees” under the Fair Labor Standards Act (“FLSA”), the federal minimum wage and overtime law. For employers considering unpaid internships, the key question is whether the unpaid intern is “suffered or permitted” to work within the meaning of the FLSA. DOL stresses that in the “for-profit” sector, internships will most often be viewed as employment. However, there is a narrow exception for training programs. DOL has identified six criteria which must exist to satisfy the exception:
 

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
     
  2. The internship experience is for the benefit of the intern;
     
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
     
  4. The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded;
     
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
     
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
     

In determining whether an intern is really an employee, DOL distinguishes those experiences that are similar to an educational environment from those that are not. If the program is structured around a classroom or academic experience, the student gets educational credit, or the experience provides skills that could be used in multiple employment settings the intern is less likely to be deemed an employee. If, however, the business is dependent on the intern’s work or the intern is performing productive work, the intern is more likely to be deemed an employee – even if the intern may receive some benefits (e.g., developing a new skill or improving work habits).


Another key consideration is workforce displacement. According to DOL, an intern is an employee if the employer would have employed additional workers or would have required existing employees to work additional hours but for taking on the intern.

A determination that an unpaid intern is, in fact, an employee can have consequences beyond minimum wage and overtime obligations. Discrimination laws, worker’s compensation coverage, state and federal tax laws, employee benefits and unemployment insurance coverage are all implicated in the event of a misclassification. Because the impact of a potential misclassification is so significant, before accepting any unpaid interns an employer, in particular, a for-profit employer, should, at a minimum, take the following steps:

  1. Provide an agreement or letter making it clear there is no pay and no guaranteed job in the future;
     
  2. Adopt a policy that sets up strict supervision of the internship program and the intern and assigns a mentor;
     
  3. Train supervisors and managers regarding the limits of what interns are permitted to do;
     
  4. Ensure the primary benefit of the internship is for the student, not the employer -- minimize assigning the same duties given to regular employees, and do not use interns to displace any employees;
     
  5. Arrange for a structured program of internal and, if possible, external instruction; and
     
  6. If possible, formalize arrangements with the intern’s college or university, and ensure that the work is being done for college credit.
     

New York State Department of Labor Limits Employers\' Ability to Recover Overpayment of Wages

April 22, 2010

By John M. Bagyi

Section 193 of the New York Labor Law prohibits employers from making deductions from an employee’s wages, except for certain deductions made for the benefit of the employee which are authorized by the employee in writing in advance, such as deductions for employee contributions to employee benefit plans. It also prohibits separate transactions between the employee and employer which would amount to the same thing as a prohibited deduction. In a surprising and disappointing change of direction, the New York State Department of Labor (“NYSDOL”) now takes the position that deductions from an employee’s wages for money owed to the employer (e.g., a loan, or overpayment of wages) are prohibited by Section 193 even with the employee’s written consent, because they are not similar to the types of permissible deductions enumerated in Section 193.

In addition, while it is permissible for an employer to ask an employee to pay the money back, if the employer threatens the employee with discipline for failure to pay back the money, NYSDOL will consider that conduct to be a prohibited separate transaction under Section 193. In fact, NYSDOL states that in making such a request the employer must clearly communicate that the employee’s refusal will not result in discipline or retaliatory action. NYSDOL believes that a legal proceeding to collect the money is the employer’s only legal recourse if the employee voluntarily fails to repay.
 

A Trap for the Unwary: "Professional" Duties and the Professional Exemption

January 20, 2010

By Subhash Viswanathan

Employers often assume that because an employee performs “professional” work she must be an exempt professional under the Fair Labor Standards Act (“FLSA”). Late last year, the United States Court of Appeals for the Second Circuit issued a decision which serves as a valuable warning to employers who make that assumption, Young v. Cooper Cameron Corp. For those of you who may not know or recall what the professional exemption is all about, here is a quick primer. The FLSA’s overtime provisions do not apply to exempt professionals. An exempt professional is one who, among other things, is “employed in a bona fide professional capacity.” The FLSA does not define that term any further. But the U.S. Department of Labor (“DOL”) has issued extensive regulations on the subject. In the Young case, the Second Circuit’s interpretation and application of these regulations revealed a common employer mistake: Just because the position seems like a “professional” position does not mean it falls within the professional exemption. In this case, the plaintiff was performing a type of engineering design work on a pretty sophisticated piece of equipment used on oil drilling rigs. While he had 20 years of engineering-type experience, he had only a high school degree. Nevertheless, based on the amount of his engineering experience and the type of work he was performing, the employer classified him as exempt.

The employer got it wrong. As the Court observed, DOL’s regulations are quite clear: one of the requirements for the exemption is that the work must be in a field of science or learning customarily acquired by a prolonged course of specialized study, and the best evidence of this is a specialized academic degree. The crux of the dispute then centered around the term “customarily,” the employer arguing that use of that term showed an academic degree was not required in all circumstances and that the plaintiff’s engineering experience was an adequate substitute. Under the employer’s view, the lack of a degree requirement for the position did not matter, because the duties of the position required knowledge of an advanced type. The Second Circuit disagreed, noting that the regulations dealt with that issue as well. The Court concluded that “customarily” means a specialized degree is required in the vast majority of cases. In the Court’s view, this means that a rare individual could still be exempt without having a degree, but only in a situation where other individuals performing the work typically held such a specialized degree. As the Court observed, the term “customarily” does not mean that the degree requirement can simply be ignored in favor of focusing solely on the type of work being performed. In the case before it, the plaintiff was not the only employee holding the engineering position and no one who held it had anything more than a high school degree. As a result, it could not be said that advanced education in a specialized field was customarily required for the position.

The lesson for employers is clear: in order for the professional exemption to apply, the duties performed must require use of knowledge of an advanced type in a field of science or learning and the position must typically require an advanced degree in that specialized field of science or learning. Having the right duties alone is not sufficient.

On a side note, the plaintiff apparently did not complain about being treated as exempt until he lost his job in a reduction in force after holding the position for three years. This in itself is a small lesson in how exemption issues can pop up unanticipated.
 

New York DOL Issues New Guidelines and Forms Addressing Employer Obligations Under Section 195(1)

January 5, 2010

By Andrew D. Bobrek

The New York State Department of Labor (“NYSDOL”) recently posted guidelines and instructions on its website addressing employer obligations under New York Labor Law § 195(1). This recently amended statute requires employers to notify newly-hired employees in writing of their pay rates, pay dates, and, if applicable, overtime rates. The statute also requires employers to obtain written acknowledgments from new employees confirming receipt of this information.

NYSDOL also posted several new “model” forms for employers to use when complying with Section 195(1). The new forms supplement the problematic, one-size-fits-all form published by the agency last year. These new forms are intended to cover several different employee groups, including non-exempt employees who are paid either: (a) an hourly rate; (b) multiple hourly rates; (c) a weekly rate or salary for a fixed number of hours (40 or fewer in a week); (d) a salary for varying hours, day rate, piece rate, flat rate, or other non-hourly pay; or (e) a prevailing rate on a public work project. There is also a new model form for exempt employees.  

Consistent with its earlier reversal of position, NYSDOL’s guidelines and instructions state that use of the new model forms is not mandatory at this time. Rather, according to the guidelines, employers may create their own forms, or use or adapt the model agency forms, as long as: (a) the required information is given at the time of hiring, before any work is performed; (b) the employee is given a copy; and (c) the employee signs an acknowledgment of receipt, which the employer must retain for six years.

Several additional aspects of the new materials are also noteworthy. First, NYSDOL takes the position that notices to exempt employees —which apparently include employer-created notices—“must state the specific exemption that applies.” This requirement does not appear in Section 195(1). Second, the new model forms do not require the preparer to certify that the contents are true and accurate under penalty of perjury, which represents a change from the original one-size-fits-all form previously published by the agency. Third, the NYSDOL guidelines discuss how employers can craft written notices for commissioned salespersons, which will satisfy both Section 195(1) and Section 191(1)(c) of the New York Labor Law. Section 191(1)(c) requires that the terms of employment for commissioned salespersons (how wages, salaries, drawing accounts, and commissions are calculated) be reduced to a writing.

 

Independent Contractor or Employee: An Old Question Continues to Haunt Employers

December 23, 2009

In recessionary times like these, employers often rely more heavily on independent contractors to avoid the personnel costs associated with hiring regular employees. Doing so, however, creates risks. Now is a good time to make the effort to determine whether your independent contractors are really independent contractors. Just don’t expect the answer to come easily.

The issue of who is properly classified as an independent contractor (as opposed to employee) has been giving employers headaches for decades. As the United States Supreme Court noted over 60 years ago: “Few problems in the law have given greater variety of application and conflict in results than the cases arising in the borderland between what is clearly an employer-employee relationship and what is clearly one of independent entrepreneurial dealing.” N.L.R.B. v. Hearst Publication, 322 U.S. 111, 121 (1944). It is little wonder that even the Supreme Court is troubled by this legal issue given the difficulties involved in the analysis. For starters, courts and government agencies (both state and federal) use different legal tests to make this determination. As a result, a single set of facts can produce different legal conclusions. Moreover, none of the tests utilized relies on definitive factors. As the Internal Revenue Service (“IRS”) states on its website, “[T]here is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.”

Although the issue is old, it has continued vitality. There has been a significant increase in litigation, government enforcement and legislation over the misclassification of independent contractors in recent years. It is equally clear that the focus on independent contractor misclassification, far from slowing down, will only continue to pick up steam. The remainder of this blog summarizes some recent developments demonstrating that employers need to be very careful when using independent contractors.
 

New York State’s Joint Enforcement Task Force on Employee Misclassification (“Task Force”), formed in 2007, continues to address, among other things, the problem of employers who inappropriately classify employees as independent contractors.  According to the Task Force’s most recent Annual Report, it has uncovered approximately 12,300 instances of employee misclassification resulting in more than $157 million in unreported wages. Partly in response to the Report, Senate Labor Committee Chairman George Onorato, D-Queens, and Senate Insurance Committee Chairman Neil Breslin, D-Albany, renewed their push for passage of a bill which would, among other things, levy fines of up to $5,000 per employee for any construction company that misclassifies its workers as independent contractors. The bill also creates a presumption of employment status in the construction industry unless certain factors are established.

On August 21, 2009, the Massachusetts Supreme Judicial Court held in Somers v. Converged Access, Inc. that an employee who has been misclassified as an independent contractor is entitled, under Massachusetts law, to recover any wages and benefits he proves he was denied because of his misclassification, including holiday pay, vacation pay, and overtime. In so doing, the Court rejected the employer’s argument that it should not have to pay any damages because had it known the individual was an employee instead of an independent contractor, it would have paid him a lower hourly rate than he received as an independent contractor.

New York Attorney General Andrew M. Cuomo, Montana Attorney General Steve Bullock, and New Jersey Attorney General Anne Milgram have announced their intent to sue FedEx Ground Package Systems, Inc. (“FedEx Ground”) for violations of state labor laws stemming from the Company’s alleged misclassification of its drivers as independent contractors. The Attorneys General claim that such misclassification deprives drivers of workers’ compensation and other labor and employment legal protections received by FedEx Ground’s employees.

In Mohel v. Commissioner of Labor, a decision dated November 17, 2009, the New York Industrial Board of Appeals found that drivers of a limousine service were employees as opposed to independent contractors under the “right to control” test used by the New York State Department of Labor.

Finally, Beginning in early 2010, the IRS will launch an audit initiative that will audit the federal tax returns of 6,000 companies to assess compliance with tax and labor regulations. As part of this audit, the IRS will examine independent contractor misclassification. The initiative was prompted, in part, by advice from the United States Government Accountability Office to the IRS and United States Department of Labor to step up efforts to reduce the misclassification of independent contractors.