Wage-and-hour actions under the Fair Labor Standards Act (“FLSA”) are one of the largest growing types of litigation, and have been for over a decade. Pennsylvania businesses may soon experience an increase in FLSA-related litigation, as the Pennsylvania Department of Labor & Industry (DLI) and the U.S. Department of Labor (DOL) signed a “Memorandum of Cooperation” on August 4, 2016 which sets the stage for intensified enforcement of worker classification rules.

The Memorandum is one of many between the DOL and state agencies as part of “The DOL Misclassification Initiative,” which began in 2011 with an agreement between the DOL and the Internal Revenue Service to address the perceived misclassification of certain workers as independent contractors as opposed to employees. The DOL has partnered with more than 30 states through similar agreements to share information and cooperate in the enforcement of the FLSA and state wage-and-hour laws. The DOL’s Wage and Hour Division has also issued memoranda, called “Administrator’s Interpretations,” setting forth the DOL’s interpretation of the differences between employees and independent contractors. These memoranda make clear that the DOL views misclassification as a pervasive problem, and intends to take an aggressive enforcement approach.

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