Bass, Berry & Sims attorney Tim Garrett was quoted in a Law360 article addressing state attorneys general (AG) prioritizing the misclassification of employees as independent contractors.
Despite several states leading enforcement efforts in this area, Tim noted that companies are disinclined to reclassify workers. “There’s some attempt by the employer to be able to resolve these things without having to reclassify, because that creates a lot of other cascading issues,” he said. “Have you paid them overtime wages? Have you included their payroll in your workers’ comp premium calculus?”
He noted that the approach instead seems to have been, “We’re not going to reclassify them, but we’ll at least recognize that we’re going to give them some of these minimum benefits.”
In light of litigation, Tim noted that companies might try to argue that the AG lacks standing to pursue the claims. “I can certainly agree the attorney general has the ability to come in and say, ‘From a tax revenue standpoint, we’re losing out because you’ve misclassified them,'” he said. “But beyond that, can the attorney general really sue to say you owe this driver overtime for this week of work? I’m not sure.”
Still, companies should take AG suits seriously. There is “litigation risk, exposure risk and then reputational risk, and a lot of these, particularly, big-name companies don’t want that reputational risk,” Tim said.
The full article, “State AG Actions Secure Workers’ Pay But Not Status,” was published by Law360 Employment Authority on November 5 and is available online (subscription required).