U.S. Department of Labor Cracks Down on Misclassified Employees

Be warned: If you’re classifying your employees as independent contractors, you may have to answer to the U.S. government. The U.S. Department of Labor’s Wage and Hour Division is focusing its attention on the misclassification of employees as independent contractors at nail salons in the Seattle metropolitan area. This enforcement initiative aims to protect vulnerable workers in the industry from systemic violations of the Fair Labor Standards Act’s minimum wage and overtime pay provisions by ensuring that they are properly classified according to federal law.
Common violations found in the nail salon industry across the United States — stemming in part from employers misclassifying workers as independent contractors or “booth renters” rather than regular employees — include failing to pay proper overtime compensation, failing to maintain accurate records of daily and weekly hours worked, paying a flat rate for all hours worked, failing to pay for hours worked for pre- or post-shift duties, and making illegal deductions for uniforms, equipment rental, or other items that reduce a worker’s regular pay rate below the minimum wage or cut into full wages due in overtime weeks.
According to the Washington State Department of Licensing, there are currently 24,898 active licensed manicurists in the state. Under this initiative, the Wage and Hour Division is conducting unannounced investigations. When violations are found, back wages will be collected for affected employees, and penalties will be assessed against employers. Nationwide, the division has collected more than $688,000 in back wages for employees in the hair, nail, and skin care industries over the past two years.
“Employers cannot simply absolve themselves of the responsibility to pay proper wages and overtime to workers by classifying them as independent contractors,” says Ruben Rosalez, acting administrator of the Wage and Hour Division’s Western Region. “Many nail salon employees are immigrants and particularly vulnerable to wage exploitation. While the Wage and Hour Division supports the use of legitimate independent contractors, who play an important role in our economy, employers in the nail industry must comply with their legal responsibilities to properly classify and compensate their workers. We are committed to ensuring a level playing field for all businesses and employers that abide by the rules.”
— Judy

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