Wage & Hour Insights is reporting on a new lawsuit filed against Lady Gaga by her former personal assistant. In short, the plaintiff claims that she is owed several hundred thousand dollars because Lady Gaga failed to pay her overtime.

The Lawsuit

The complaint describes a 24-hour non-stop cycle of Gaga-ness, including allegations that the plaintiff:

• worked “not only in [Lady Gaga's] home, but also during her travels for her global concert tours, from city to city throughout the world, at locales including stadiums, private jets, fine hotel suites, yachts, ferries, trains and tour buses”
• “was always behind the scenes, and figuratively, if not literally, always at her side”
• “was on duty during all hours of each twenty-four (24) day, with no entitlement to breaks, for meals or otherwise, or, at times, even sleep”
• was responsible for keeping Lady Gaga “on her desired schedule from the earliest waking hour, for being responsive to the slightest need throughout the day, and for addressing spontaneous, random matters in the middle of the night”
• was also responsible for “ordering meals and ensuring that they were correctly prepared and served at specific times; maintaining the availability of [defendant's] personal supplies; ensuring the availability of chosen outfits; ensuring the promptness of a towel following a shower; and serving as a personal alarm clock to keep [defendant] on schedule”

Wow.

The Lessons

All employers (even celebrity superstars who demand 24-hour attention including “towel promptness”) need to know the ins and outs of the Fair Labor Standards Act.

Never ever assume that an employee is exempt from overtime just because they’re paid a salary. And always always always carefully follow FLSA record-keeping and other requirements. If you don’t, you could be facing claims for backpay, damages and penalties far exceeding the original amount owed.

Click here for our handy FLSA Cheat Sheet to help you stay out trouble.

As discussed here previously on the Blawg, the government continues to crack down on employers that misclassify independent contractors. Now, however, the IRS has announced a new Voluntary Compliance Settlement Program (VCSP) that will allow employers to rectify past independent contractor misclassifications by paying a small tax and agreeing to reclassify the contractors as employees.

Who’s Eligible?

Employers that:

• have consistently treated the workers as nonemployees;
• have filed all required 1099 forms the previous three years; and
• are not currently under audit for misclassifying those workers.

How Do You Apply?

Employers must file an Application for Voluntary Classification Settlement Program (Form 8952) at least 60 days before the reclassification. The form will be available on the IRS site in October.

What Happens After I Apply?

According to the IRS, an employer who participates in the VCSP:

• will agree to treat the workers as employees for future tax periods;
• will not be subject to an employment tax audit with respect to the workers’ classification for prior years;
• will pay 10% of the employment tax liability that may have been due on the compensation paid to the workers, without interest or penalties;
• will extend the period of limitations on the assessment of employment taxes for three years; and
• will, for the first three years under the program, also be subject to a special six-year statute of limitations, rather than the three-year limitation period that generally applies to payroll taxes.

Should I Do It?

As always, I highly recommend that you discuss any potential misclassifications with your favorite employment lawyer before taking action.

On Forbes.com, one prominent lawyer calls the VCSP “illusory” and advises employers to avoid it. Another prominent firm counsels employers to “think carefully” before jumping into the program.

Where Can I Get More Info?

Of course, the best advice is to classify all employees and contractors correctly in the first place. Click here for our handy independent contractor checklist and here for a recent Q&A on this topic.

Click here for VCSP FAQs from the IRS itself.

What’s Happening?

According to the report, the Department of Labor is signing information-sharing agreements with the IRS and nine states that will help enforcement agents target companies that unlawfully label employees as independent contractors to skirt minimum wage and overtime pay requirements. The DOL has also hired about 300 new agents to investigate wage complaints and has seen a 400% increase in backpay recoveries in recent years.

Noting that the new arrangement could subject employers to penalties from multiple agencies, Patricia Smith, the DOL’s top lawyer, said “There’s more of an incentive to be in compliance because the cost of what we consider to be illegal activity has increased.”

Participating states include Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington, with New York indicating that it plans to join the effort in the future.

The Bottom Line

Now is not the time to run afoul of wage and hour laws. To stay out of trouble, click here for our handy Independent Contractor Checklist and here for a recent Question of the Week addressing this subject.

Enjoy!

(Special thanks to Dan Schwarz of the Connecticut Employment Law Blog for bringing this to my attention.)