Lowe’s takes a blow with seven figure settlement of independent contractor misclassification suit

As the Lowe’s lawsuit demonstrates, drawing the line between independent contractors and employees is very tricky, and if done incorrectly, it can lead to big liability. In addition to the amounts in dispute in the Lowe’s lawsuit, if you misclassify your independent contractor you can face government audits (unemployment social security…), or even worse, a wage and hour lawsuit from your contractors who claim they are owed overtime. Under federal law overtime liability is generally double damages plus attorney fees, going back two to three years – but state law can increase these amounts. In Maryland, for example, overtime liability can be up to treble damages plus attorney fees, going back three years!! Companies need to take careful precautions to correctly structure their relationships with independent contractors, document their relationships by contract, and properly use independent contractors in order to stay in compliance with the law.

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