US Labor Department signs agreement with
New Hampshire Department of Labor to reduce misclassification of employees

WASHINGTON — Officials from the U.S. Department of Labor and the New Hampshire Department of Labor has signed a memorandum of understanding with the goal of protecting the rights of employees by preventing their misclassification as something other than employees, such as independent contractors or other nonemployee statuses.

Under this agreement, both agencies will share information and coordinate law enforcement. The memorandum of understanding represents a new effort on the part of the agencies to work together to protect the rights of employees and level the playing field for responsible employers by reducing the practice of misclassification. The New Hampshire Department of Labor is the latest state agency to partner with the Labor Department.

"Misclassification of employees deprives workers of rightfully-earned wages and workplace protections and undercuts law-abiding businesses," said U.S. Secretary of Labor Thomas E. Perez. "Which is why combating misclassification is one of several important strategies to promote shared prosperity to help ensure that our economy works for everyone."

"Working with the states is an important tool for ending misclassification and other workplace abuses," said Solicitor of Labor of the U.S. Department of Labor M. Patricia Smith. "These collaborations allow us to better coordinate and ensure compliance with both federal and state laws alike."

"Misclassification of workers steals benefits and protections from employees, and allows unfair advantages to businesses that do it," said New Hampshire Labor Commissioner James W. Craig. "This agreement will help us grow our state and regional economy by leveling the playing field for honest and law-abiding employers."

Business models that attempt to change or obscure the employment relationship through the use of independent contractors may not be used to evade compliance with federal labor law. Although legitimate independent contractors are an important part of our economy, the misclassification of employees presents a serious problem, as these employees often are denied access to critical benefits and protections — such as family and medical leave, overtime compensation, minimum wage pay, Unemployment Insurance, personal protective equipment and retirement benefits — to which they are entitled. In addition, misclassification can create economic pressure for law-abiding business owners, who often find it difficult to compete with those who are skirting the law.

Memoranda of understanding with state government agencies arose as part of the department's Misclassification Initiative, with the goal of preventing, detecting and remedying employee misclassification. Alabama, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington state agencies have signed similar agreements. More information is available on the Department of Labor's misclassification website at http://www.dol.gov/misclassification/.

The mission of the department is to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and ensure work-related benefits and rights. To learn more about the Fair Labor Standards Act's requirements, call the Wage and Hour Division's toll-free hotline at 866-4US-WAGE (487-9243) or visit its website at http://www.dol.gov/whd/.