The US Department of Labor extended the comment period for its proposed rule for determining employee or independent contractor classification under the Fair Labor Standards Act; an assisted living facility’s part-owner and operator has paid more than $1 million in back wages and damages to 47 workers for misclassification and other wage and hour violations; Shipt faces misclassification charges lodged by Minnesota and the District of Columbia.
Independent contractor classification rule. The US Department of Labor has extended the comment period [1] for its independent contractor “Notice of Proposed Rulemaking.” The deadline is now Dec. 13; it had previously been Nov. 28.
The Notice of Proposed Rulemaking [2] aims to change how independent contractors are classified under the Fair Labor Standards Act and remove the current Trump-era independent contractor rule. The proposed rule was announced last month.
Ultimately, it’s courts that determine proper classification on a case by case basis, notes Allan Bloom, an attorney with Proskauer, in a blog post [3]. “The weight [courts] afford the rule should depend on ‘the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade,” Bloom wrote. “Having waited nearly two years to revisit the issue of independent contractor classification, the Biden administration clearly took its time to propose a rule it believes is well-grounded and defensible.”
In a Staffing Stream blog post, John Polson, an attorney with law firm Fisher Phillips, indicated that while the DOL may make changes to its rule following a review of public comments, “You can expect any such revisions to be minor in nature and not to impact the overall direction of the current proposal.”
Given the volume of comments already submitted to the DOL, Bloom noted the final rule would be published in the first quarter of 2023 at the earliest.
$1 million payment. The part-owner and operator of a Pittsburgh-area assisted living provider has paid more than $1 million in back wages and liquidated damages to 47 workers after a US Department of Labor investigation found cases of willful independent contractor misclassification among other wage and hour violations.
Kelley Oliver-Hollis, part-owner and operator of Serenitycare LLC — which operates as Serenitycare in Pittsburgh — paid the department $1.05 million as part of its recovery for the affected workers.
The employer also paid a $44,741 civil money penalty for willfully violating the Fair Labor Standards Act. The court’s action partially resolves litigation against Oliver-Hollis and Serenitycare filed by the department’s Office of the Solicitor [4] in July 2022.
“Federal law requires employers to comply with all federal employee protections, including proper classification and payment of all legally earned wages,” said Wage and Hour Division District Director John DuMont in Pittsburgh. “Workers also have the right to participate in investigations without fear of retaliation.”
Shipt lawsuits. The attorneys general of Minnesota and the District of Columbia announced lawsuits against grocery delivery platform Shipt over its classification of workers as independent contractors.
Both lawsuits claim the Target-owned B2C work services platform classified its workers as independent contractors to avoid labor costs.
According to the lawsuits, despite Shipt’s characterization of shoppers as independent contractors, the platform determines who is eligible to be a shopper and controls customers’ access to shoppers and vice versa. Shipt monitors shoppers’ performance and sets the markup for goods ordered through its service, leaving no opportunity for shoppers to profit due to their business acumen or customer relationships.
Additionally, the lawsuits claim Shipt limits shoppers’ communication with customers, masking their numbers from each other while shoppers perform their work.