Utah companies get heat for payroll violations
A handful of companies in Salt Lake City recently received some bad news: They'd been served. The U.S. Department of Labor announced in April that two of the city's employment agencies and their clients committed willful violations of the Fair Labor Standards Act.
The companies were paying their employees inaccurately for their time and attendance, so the department is filing a lawsuit against them for compensation and damages.The firms claimed that their workers were not actually employees due to a lack of an employee-employer relationship, so they slid by without paying their laborers for overtime.
Employee misclassifications such as these can bring steep costs if an employer is caught in the act. Because of this, according to American Public Media's Minnesota Public Radio, a pertinent question has entered into the center of labor discussions: how do you define the difference between an employee and a contractor?
"There is no standard definition...It's never clear who's a contractor and who isn't," Matthew Bidwell, a management professor at the University of Pennsylvania's Wharton School of Business, told MPR. "It's a very murky question."
In the aftermath of the recession, employers may be hesitant to hire permanent workers, but the increased risk of being sued like the companies in Utah could be an incentive for more precise definitions.
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