In a move that could ultimately have implications for Georgia businesses, the IRS and Labor Department have begun a program of sharing information to help identify businesses that are in violation of employment law. The government seeks to aggressively pursue those in violation of wage and hour law, particularly ones that are accused of cheating workers out of wages. A primary concern is businesses that mischaracterize workers as independent contractors to avoid minimum wage and overtime rules.
The move is likely to make things more expensive for businesses found to be in violation, as they may face charges and fines not just from state agencies, but federal agencies as well. State agencies now have the ability to communicate directly with the IRS, subjecting businesses to tax penalties. Although Georgia is not yet one of the eight states to have already signed up for the program, there are expectations that other states will sign similar agreements with the federal government soon.
A representative for a national lobbying agency pointed out how government rules concerning wage and hour law are increasingly complex. This raises the risk that a business that inadvertently finds itself out of compliance can be subject to increased penalties on the federal level. The hope is that increased enforcement will help legitimate businesses from having to compete with companies who circumvent the law.
From 2008 to 2010, the money collected by the Department of Labor on behalf of misclassified workers quadrupled. Three hundred new investigators have been hired. More cooperation with the states should allow those investigators to be more efficient. For the time being, however, communication is only one way: the IRS is not referring cases to the Labor Department on individual cases.
Employers face a maze of rules and regulations regarding wage and hour law. Most are only trying to manage and grow their business while honoring and complying with the laws as they understand them. The problem, as pointed out by the national lobbying agency cited in this article, is that the complexity of the laws may cause difficulties for businesses that want to comply but are not certain of what it is they are required to do.