The United States Department of Labor has signed a three-year Memorandum of Understanding (MOU) with the Vermont Department of Labor that is designed to protect employees’ rights by preventing their misclassification as independent contractors or other non-employee statuses. According to the agreement, the agencies are attempting to more effectively and efficiently communicate and cooperate on areas of common interest, including sharing training materials and information, providing employers and employees with compliance assistance information, and conducting coordinated investigations. The goal of the agreement is to protect wages, retirement income, equal employment opportunity, and to ensure a level playing field for law-abiding businesses and proper compliance with applicable tax laws.

Vermont joins 25 other states that have signed similar agreements with the federal Department of Labor, including, but not limited to, California, Connecticut, Colorado, Illinois, New York, Texas, and Washington.

According to David Weil, U.S. Department of Labor Wage and Hour Administrator, “Misclassification deprives workers of their hard earned wages and undercuts businesses that follow the law. This agreement sends a clear message that we are standing together with the state of Vermont to protect workers and responsible employers.”

The agreement is another in a long line of steps taken by federal and state governments to make sure workers are receiving the pay and benefits they are entitled to under the law. Enforcement of these agreements also ensures that the federal and state governments receive the taxes they otherwise may not.

Employers in the states in which such MOUs exist should review their policies to prevent inadvertent misclassification and to ensure compliance with federal and state regulations.

By David E. Leach & Caroline J. Berdzik of Goldeberg Segalla