Freeman & Associates Contracting, a Raleigh construction firm, has agreed to pay four workers $20,000 in back wages after U.S. Department of Labor investigators determined the workers were improperly classified as independent contractors.
The department’s Wage and Hour Division concluded the company paid the workers straight time when they worked more than 40 hours in a week.
Making the case wasn’t a stretch for the investigators. The employees had previously been classified as employees.
They found Freeman & Associates suddenly reclassified them with the clear intent of avoiding overtime pay. The move also affected the workers’ eligibility for, minimum wages and unemployment insurance.
More bad news for the company: IRS and North Carolina officials are now trying to determine if Freeman & Associates owes back taxes and penalties.
Note: Reclassifying employees while keeping them in the same jobs is boneheaded. The DOL, IRS and the many other interested parties will investigate to determine if the newly independent contractors are truly independent.
Employers rarely win those kinds of cases.