“What is in a name? That which we call a rose. By any other name would smell as sweet . . .”

-William Shakespeare, Romeo and Juliet

Roses aside, classifying someone as an “employee” or an “independent contractor” (or rather misclassifying them) can have significant effects. The misclassification of employees as independent contractors is the focus of a U.S. Department of Labor Wage and Hour Division enforcement initiative. The DOL and the IRS have joined forces and signed a memorandum of understanding that will allow the sharing of information across the two agencies in an effort to improve compliance. More importantly, the Louisiana Workforce Commission has likewise entered into an agreement with the DOL to establish “a collaborative relationship to promote compliance…”  For more information on the enforcement initiative and other states who have signed similar agreements with the DOL click here.

The potential cost of misclassification of employees as independent contractors can be high. For example, the DOL recently obtained a $1.3 million consent judgment against a technology company that had misclassified employees as independent contractors. So, what is in a name (or classification) can be very important.