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$10.2 Million Awarded by DOL to Detect Worker Misclassification

Recently, the U.S. Department of Labor announced awards of $10,225,183 in grants to 19 states to implement or improve worker misclassification detection and enforcement initiatives in their unemployment insurance programs.   California, Delaware, Florida, Hawaii, Idaho, Indiana, Maryland, Massachusetts, New Hampshire, New Jersey, New Mexico, New York, Oregon, South Dakota, Tennessee, Texas, Utah, Vermont, and Wisconsin all received grants of up to $500,000 each, with Maryland, New Jersey, Texas, and Utah each receiving shares of an additional $2 million in grant funds as a part of an innovative bonus program.   This “bonus” was awarded to those states with “high performance or most improved performance in detecting incidents of worker misclassification.”

This marks the first time the DOL has awarded grants to states dedicated to curbing misclassification.  However, the DOL’s stepped up enforcement of worker misclassification has been ongoing for several years and cooperation between the DOL and state agencies is nothing new.  For example, several states, including California and New York, have entered into formal Memoranda of Understanding with the DOL to share information regarding independent contractor misclassification, opening employers up to both federal and state liability from a single investigation.

These grants show that the DOL and state governments’ interest in worker misclassification is not waning.  Employers who have not already closely reviewed their independent contractor relationships should consider performing a privileged audit in order to assess the risk they may have of misclassification claims.

© 2020 Proskauer Rose LLP. National Law Review, Volume IV, Number 308



About this Author

Guy Brenner, Labor Attorney, Proskauer Rose, arbitration proceedings Lawyer

Guy Brenner is a partner in the Labor & Employment Law Department and co-head of the Non-Compete & Trade Secrets Group. He has extensive experience representing employers in both single-plaintiff and class action matters, as well as in arbitration proceedings. He also regularly assists federal government contractors with the many special employment-related compliance challenges they face.

Guy represents employers in all aspects of employment and labor litigation and counseling, with an emphasis on non-compete and trade secrets issues,...

Carolyn M Dellatore, Labor Employment Attorney, Proskauer Rose law firm

Carolyn M. Dellatore is an Associate in the Labor & Employment Law Department and a member of the Employment Law Counseling & Training Group, resident in the Newark office. Her practice focuses on the representation and counseling of employers in all areas of employment and labor relations.