GAO Issues Employee Misclassification Report

The US Government Accountability Office recently issued a report outlining perceived issues relating to employee misclassification. The report focused on misclassification within the federal Department of Labor and Internal Revenue Service and included six recommendations for executive action by the DOL and IRS.

The GAO’s recommendations for executive action included:

increase DOL’s focus on misclassification of employees during targeted investigations
encourage sharing of information regarding misclassification between the DOL’s wage and hour division and OSHA (also within the DOL), and that cases outside of DOL’s jurisdiction should be referred to the relevant agency
establish a joint interagency effort between the DOL, IRS, and other federal and state agencies to address the misclassification of employees as independent contractors
conduct worker outreach efforts, including the development of a standardized document on worker classification
create an IRS forum to regularly collaborate with states to identify and address data sharing efforts relating to the QETP initiative
extend the IRS Classification Settlement Program to include employers that volunteer to prospectively reclassify employees. Additionally, the report included discussion of limiting the “industry practice” prong of the reasonable basis test to establish Section 530 safe harbor.

Additional legislation relating to this report may yet be introduced in the 111th Congress.