Wednesday, April 15, 2015

Employee Misclassification, Payroll Card Updates

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In early March, government representatives and industry experts came together in Washington, D.C., to provide insight into the latest developments affecting the payroll profession at APA's Capital Summit. Representatives from the DOL and Consumer Financial Protection Bureau (CFPB) discussed new legislation impacting payroll in 2015.

Mark Lara, a District Director in the DOL’s Wage and Hour Division, provided an update on efforts to curb worker misclassification. “The most dangerous employee is a confused employee,” he said. One way to avoid problems is to make all payroll information clearly understandable. For employers that are in compliance, a confused worker who contacts the DOL could lead to complications that could have been prevented. Lara also advised attendees about the consequences of misclassifying employees as independent contractors. When investigating and enforcing FLSA violations, the DOL generally looks back two years, but the time may be extended to three years where there are willful violations. Employers should also be aware of the “liquidated damages” provision of the FLSA. These damages are equal (and in addition) to the amount of any unpaid wages that the employer is ordered to pay the employee. Lara stated that DOL will seek them in every case.

Kris Andreassen, Senior Counsel at the CFPB, educated attendees on a proposed regulation on prepaid accounts, which would apply to payroll cards. The proposed regulation would require two sets of pre-acquisition disclosures: a short form outlining key fee information and a long form providing additional terms and conditions. For payroll cards, the proposed rule would require a disclaimer at the top of the short form stating, “You do not have to accept the payroll card. Ask your employer about other ways to get your wages.” The rule would require card issuers to make their account agreements available on their website as well as providing them to the CFPB for posting. The proposed rule would also extend the length of time payroll card account histories must be available—from 60 days to 18 months.

Read the April edition of Inside Washington for a discussion of the APA's comments on the CFPB proposed rule.