Effective December 14, 2022, the U.S. Department of Labor (USDOL) Wage & Hour Division and the Internal Revenue Service (IRS) Small Business/Self-Employed Specialty Employment Tax Division have renewed and updated a memorandum of understanding (MOU) for employment tax referrals. The MOU is part of the agencies’ joint effort to combat employee misclassification of employees and to protect workers’ rights to their full wages, benefits and protections under both federal and state laws. This includes the misclassification of employees as independent contractors. For more information, see the updated MOU.
This focus on the potential misclassification of employees underscores the need to have a sound compensation plan aligned with realistic job descriptions and pay, as well as accurate AAPs. If you need advice on how best to achieve these, please contact us.