EEOC Aims to Combat Worker Misclassification
On May 28, 2021, the U.S. Equal Employment Opportunity Commission (the “EEOC”) submitted its Fiscal Year 2022 Congressional Budget Justification to the U.S. Congress (the “Budget Justification”). The Budget Justification includes “Mandatory Supplement” dollars from FY 2022 through FY 2031, to safeguard workplace rights and protections for those who are employed in positions created by President Biden’s American Jobs Plan. The “Mandatory Supplemental” dollars “would also help to fund the EEOC’s participation in a multi-year, multi-agency effort to combat worker misclassification.” “Clarifying the employment relationship and the application of workplace civil rights protections in light of the increasing complexity of employment relations and structures, including temporary workers, staffing agencies, independent contractor relationships, and the on-demand economy” is also included in the EEOC's Strategic Enforcement Plan Fiscal Years 2017 – 2021.
Under Title VII of the Civil Rights Act of 1964 (“Title VII”), the test as to whether an individual is an employee or an independent contractor is stricter than the test applied under the Fair Labor Standards Act (“FLSA”). In other words, it is easier for an individual to prove misclassification under the FLSA than under Title VII. While Title VII only provides protections to employees, and the EEOC cannot amend the definition of “employee” under Title VII, the EEOC could sue employers on behalf of “independent contractors” who may be misclassified. These suits could include claims of hostile work environment, disparate treatment, disparate impact, or systemic discrimination.
In preparation for the EEOC’s focus on employee misclassification, which is occurring in conjunction with other Federal and state agencies’ attention to similar concerns, employers should consistently scrutinize whether individuals in the organization are properly classified as “independent contractors” rather than “employees”. Employers should examine existing corporate EEO, anti-harassment and non-discrimination statements, policies and processes to ensure that non-discrimination expectations are applicable to all stakeholders, including employees and contractors. Employers should also evaluate existing practices to which independent contractors are subject, to ensure that application of these policies does not lead to disparate impact on any protected class.
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