New York became the 15th state to hitch up with the US Department of Labor (DoL) concerning the Employee vs Independent Contractor epidemic plaguing the Mortgage Field Services Industry which we have been reporting on. S. Jeanine Conley, a Trial Lawyer over at BakerHostetler, wrote a great piece along with Amy J. Traub. It is quoted here,
Specifically, the New York State Department of Labor and New York State Attorney General’s Office executed a memorandum of understanding with the DOL to collaborate in the prevention of employers’ misclassifying employees as independent contractors or as other nonemployee statuses. This is expected to penalize numerous New York employers for the improper classification of their workers. Indeed, the DOL has noted that since the implementation of these types of agreements with other states, it had collected 97% more in back wages over a 2-year period, thereby securing over $18.2 million for close to 20,000 workers who were classified improperly.
Less than one week earlier, Senator Bob Casey, D-Pa., introduced the Payroll Fraud Prevention Act (the “Act”), which would prohibit employers from misclassifying employees as independent contractors in order to evade taxes, fair labor standards, and safety protections. The Act would require employers to issue a specific notice to independent contractors informing them of their rights and providing contact information for their local U.S. labor department office. If the employer fails to give a worker notice under the Act, the government will presume the worker is an employee for all legal and tax purposes. Employers may be subject to a $1,100 fine per worker misclassification or a special $5,000 fine for repeat offenders. The Act would also require the creation of a website summarizing the law in plain language for all workers to understand. Senators Sherrod Brown, D-Ohio, Al Franken, D-Minn., and Tom Harkin, D-Iowa joined Senator Casey in sponsoring the bill.
The government has identified two main objectives of the memorandum of understanding and the Act discussed above, respectively: 1) to prevent employers from cheating their employees out of fair compensation, benefits, and protections such as family and medical leave, overtime compensation, minimum wage pay, and unemployment insurance by deliberately misclassifying them; and 2) to put on a level playing field law-abiding companies that find it difficult to compete with “those who are skirting the law.”
The reality is that with all of the Class Action Litigation I have reported upon working their way through the US District Courts, the Mortgage Field Services Industry has known since 2010 that they are involved with an Employee Base. The ruling handed down in Hurst v Buczek Enters., 870 F. Supp. 2nd 810 (E.D. Cal. 2012) and printed in its entirety on the previous link made it very clear that the Industry had a choice. That choice was to either loosen the Command and Control over the alleged Independent Contractors and amend its ways or tumble off the precipice upon which it was standing.
What did the Industry do? By in large, Members of the National Association of Mortgage Field Services (NAMFS) ran head long over the cliff. A simple perusing through of the latest Demands for Control issued under the auspices of Memorandums, make even the most skilled barristers blush.
2014 will be the defining year. With the NAMFS still asleep at the helm, it will be up to Companies to decide whether or not they will become legal — or become statistics.