That's what I said - less the DoL fines thing. Can you find even 1 example of the DoL issuing a fine over misclassification? I can't. Lot's of cases where companies have been ordered to pay back wages and taxes - but the only penalties or fines I've ever seen have resulted from court cases (where the company challenges the DoL findings and loses in court).
It would not surprise me if many penalties and fines end up in court just for the fact that many companies are just outright going to argue against the findings of the investigation. Provided they have the $$ to finance the litigation they will do what they can to argue their case and/or reduce their fines.
Just like many drivers decided to take their moving violation ticket to court in hopes of having the penalty reduced or even thrown out… the court ultimately imposed the fine but the person could have also just pled guilty and paid it outright when the regulatory agency ( police, state patrol, etc) issued
A small employer may not have the resources to litigate and just pay the fines and make the changes.
Or probably more common is going out of business because of the cost of the fines cannot be absorbed, in addition to the enormous added cost of suddenly haveing W2 employees instead of contractors.
They see that there is only going to be financial loss each year or perhaps they decide it is no longer worth it for them to take on that amount of responsibility, risk and liability for the x amount of dollars in profit they would be left with every year.,
From deel.com :
Real-life examples of misclassification penalties
Employee misclassification penalties aren’t theoretical: the DOL regularly punishes businesses of all sizes for misclassification.
Here are a few recent examples of companies that misclassified their employees as contractors and faced fines and legal consequences. Spoiler alert: it’s not just Uber.
In 2016, two Massachusetts construction companies
intentionally misclassified over 400 employees. The consequence was $2,360,000 in fines (overtime and damages).
In 2021,
Holland Services misclassified 700 employees. The DOL’s investigation of this case led to almost $43,277,000 that the company owed in back wages and damages.
Another case from 2021:
Servant’s Quest violated the FLSA by misclassifying 50 workers. Due to unpaid overtime hours, they had to pay $358,675 in back wages.
A construction company’s owner was found guilty of misclassifying 30 construction workers who should have been employees. Since the authorities determined this act was intentional with the objective of not paying the taxes, the owner of
G&R Drywall and Framingwas sentenced to almost two years of prison, with 12-month-long consecutive probation.
Here are links showing the destruction of and harm that has came to thousands of Independent Contractors and small businesses in Californian all because of AB5 in its reclassification of workers from Independent Contractors to Employees.
This DOL Rule Change is the excutive branch of government trying to get done at the national level what AB 5 did in CA through the state, because it hasnt been able to pass the Pro Act through Congress.
Uber Lyft Drivers & Gig Economy Workers Weekly News: This week we discuss the situation in Phoenix, the Death Traps Are Back! Waymo, the self-driving unit of Alphabet, is back on the road in Arizona, with driverless vehicles available to Waymo One Customers who sign air-tight non-disclosures...
uberlyftdrivers.podbean.com
Click on PDF to view:
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A continuing collection of articles that document the destructive and disruptive effects of California's AB5 law across a vast expanse of businesses and professions. Join “Freelancers Against AB5” on Facebook
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Stories from "Freelancers Against AB5" documenting the negative impacts of Assembly Bill 5. Click on outline view for index of professions. For media inquiries, contact Karen Anderson via FB messenger at Freelancers Against AB5.
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