In the Courts:
- Nationwide food distribution company reportedly agrees in December 2012 to pay $3.53 million in allegedly unpaid employee benefits to settle proposed class action lawsuit by drivers delivering bakery goods in Connecticut and Massachusetts. Bimbo Foods Bakeries Distribution, owner and distributor of Sara Lee, Entenmann’s, and Thomas’ baked goods, allegedly misclassified its drivers in those states as independent contractors, who claimed they had been misclassified and were entitled to health insurance and paid time off benefits available to employees. Two other class action-type lawsuits are pending against the company, one in Pennsylvania and the other in Illinois. Ahlquist v. Bimbo Foods Bakeries Distribution Inc., No. 3:12-cv-01272 (D. Conn. 2012).
On the Legislative Front:
- Proposed Congressional bill introduced in the House on December 12, 2012, aiming to eliminate the safe harbor relied upon by businesses to protect against misclassification finding by the IRS. See Blog Post published Dec. 13, 2012 entitled, “New Misclassification Bill Introduced in Congress: The “Independent Contractor Tax Fairness and Simplification Act of 2012” Seeks to Eliminate “Safe Harbor” for Businesses”.
Regulatory and Enforcement Initiatives:
- U.S. Department of Labor issues its Regulatory Agenda on December 21, 2012, including a “Right to Know” rule that would update the recordkeeping regulations under the Fair Labor Standards Act “in order to enhance the transparency and disclosure to workers of their status as the employer’s employee or some other status, such as an independent contractor.” No timetable for the rulemaking has yet been set by the Department of Labor.
- Massachusetts Governor Deval Patrick announced on December 4, 2012 that his administration is launching of first-of-its-kind year-long study to determine the scope and financial cost of the state’s underground economy, including the impact on revenues due to misclassification of employees as independent contractors. “Mass. to study the underground economy,” The Boston Globe, December 5, 2012.
- IRS extends on December 17, 2012 its Voluntary Classification Settlement Program. See my Blog Post published Dec. 21, 2012, entitled, “Extension of the IRS’S Voluntary Classification Settlement Program: Is It Worth the Price of Admission for Businesses Concerned about Independent Contractor Misclassification?”.
Other Newsworthy Matters
- Misinformation abounds about how to avoid or minimize misclassification liability. See my Blog Post published Dec. 4, 2012, entitled “Misinformation about Independent Contractor Misclassification”.
Click here to see November 2012 IC Misclassification News, including a detailed prognosis of the next four years of anticipated regulatory initiatives under President Obama and anticipated Congressional action involving IC compliance and misclassification (“Obama 2.0 and Independent Contractor Misclassification“)
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Written by Richard Reibstein.