eLABORate: Florida Department of Revenue and U.S. Department of Labor Join Forces to Reduce Misclassification of Employees

January 16, 2015

On January 13, 2015, the Florida Department of Revenue and the U.S. Department of Labor entered into a Memorandum of Understanding (“MOU”) whereby these agencies will work together to reduce the misclassification of employees as independent contractors. While the MOU has not yet been made public, the Department of Labor issued a press release discussing the agreement. At the core of the MOU is the agreement that the state and federal agencies share information and coordinate law enforcement in investigation and litigation of misclassification claims. According to the agencies, the MOU will further the dual purposes of protecting the rights of employees and leveling the playing field for employers who properly classify employees.

The press release states that while an employer’s hiring of independent contractors is appropriate in certain circumstances, an employer may not, under both state and federal law, classify an employee as an independent contractor in order to avoid the legal obligations that arise in an employer-employee relationship. By way of example, it states that when an employee is misclassified as an independent contractor that employee may be denied access to employee benefits and protections, such as family and medical leave, minimum wage, overtime, and unemployment insurance. In general, in order to determine whether an individual is an employee or independent contractor, facts relating to the employer’s right and degree of control must be assessed.

The MOU between the Florida Department of Revenue and U.S. Department of Labor is the 19th such agreement between the Department of Labor and a state agency to investigate and challenge misclassification of employees. These agreements are part of the Department of Labor’s Misclassification Initiative. In recent years there has been an increase of employee misclassification litigation. 

Unique to the MOU between the Florida Department of Revenue and U.S. Department of Labor, is that neither Florida’s labor department nor Florida’s workforce division joined the MOU. With regard to the Department of Labor’s agreements with other states, the state labor department and/or workforce agency were signatories to the agreements. It is unclear at this time why Florida workforce or labor agencies were not part of the MOU. The Florida Department of Revenue is not involved in minimum wage or overtime violations. The Florida Department of Revenue, however, is responsible for collecting reemployment assistance taxes. Stay tuned for how this MOU, and its limitation to the tax-collection agency in Florida, impact misclassification investigations and litigation in Florida.