A Tennessee-based provider of at-home healthcare services is paying $358,675 in back wages to misclassified workers; a new Alabama law requires the use of the IRS 20-factor test and establishes safe harbor for employers.

Back wages. Oliver Springs, Tennessee-based Servant’s Quest is paying $358,675 in back wages to 50 workers to settle overtime violations caused when they were misclassified as independent contractors, the US Department of Labor announced last week.

The company did not pay caregivers overtime when they worked in excess of 40 hours per week under the premise overtime rules didn’t apply to independent contractors, according to the department.

“These essential employees worked long hours without receiving overtime compensation,” said Kenneth Stripling, acting Wage and Hour Division director in Nashville, Tennessee. “This is illegal and unacceptable, particularly amid a pandemic when they put themselves at risk to help others.”

Alabama. A new Alabama law requires both the Alabama Department of Labor and the Alabama Department of Revenue to follow the IRS’s traditional common law test, also known as the “20-factor test,” in determining worker classification, according to a JDSupra blog post.

Signed by Gov. Kay Ivey last week and effective July 1, the law also recognizes federal safe harbor for both payroll tax and labor law purposes, which can protect employers from reclassification even if they fail the 20-factor test. To qualify, employers must prove they (a) had a “reasonable basis” for having classified the workers in question as independent contractors; (b) issued Forms 1099-MISC each year to those workers; and (c) treated similar workers as contractors and not employees, according to the blog post.