In their continued efforts to crack down on the misclassification of independent contractors, and the resulting federal and state wage and hour violations, the New York State Department of Labor and the New York Attorney General’s office have partnered with the United States Department of Labor (“US DOL”).  New York is the 15th state to sign a memorandum of agreement with the US DOL agreeing to share information and coordinate enforcement efforts.  See US DOL News Release athttp://www.dol.gov/opa/media/press/whd/WHD20132180.htm.

With the combined resources of these state and federal agencies, employers should expect more frequent audits and be prepared to withstand significant scrutiny of their independent contractor designations.  Accordingly, as we approach the beginning of a new year, employers should take this opportunity to review their independent contractor relationships and ensure that they are appropriately classified.  As a reminder, misclassification may result in significant damages including unpaid wages, unpaid overtime, liquidated damages, interest, and attorney’s fees.

Employers may also incur the cost of defending against individual claims and potential class actions.  In addition, employers may be fined or incur penalties for violations of applicable federal and state labor laws and for failure to pay applicable federal, state, and local taxes.