The use of independent contractors in the oil and gas industry is typical and its advantages are obvious. However, decisions about when and how to use independent contractors might be made without full consideration of potential problems or the ever-looming and potentially significant risks of misclassification.
Like other industries, the oil and gas industry is under constant scrutiny from the U.S. Department of Labor and investigators from the states in which oil and gas companies operate. In addition to fines and citations issued by governmental agencies, collective actions alleging violations of the Fair Labor Standards Act have exploded in number, and are now more common than employment discrimination cases.
While the use of independent contractors remains a useful tool for oil and gas companies, human resources and legal professionals within these companies should weigh both the pros and cons associated with their use.
Read the list of pros and cons in our Client Alert.