U.S. Department of Labor Works with States to Combat Worker Misclassification

Posted by Sean P. CecilMay 08, 20150 Comments

Misclassification of workers as "independent contractors" rather than employees is a pervasive problem that restricts workers' rights and negatively affects the entire economy. Misclassified employees are denied access to benefits and worker protections such as Family & Medical Leave Act protections, minimum wage, overtime, unemployment insurance, and workers' compensation to which they are entitled. Misclassification also costs the public at large because it generates substantial losses to the Treasure, Social Security, and Medicare as well as state unemployment funds and workers' compensation risk diffusion. 

Yesterday the Department of Labor announced via press release that it has signed an agreement with the State of Rhode Island to coordinate and share information with the state to combat this pernicious problem. According to the release, with the signing of the agreement Rhode Island joins many other states including Alabama, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Hampshire, New York, Utah, Washington, Wisconsin, and Wyoming, who all have made similar agreements. Unfortunately, North Carolina has not entered into such an agreement, though the problem of misclassification costs the workers of the state dearly. 

From the press release:

"Misclassification deprives workers of earned wages and undercuts law-abiding businesses. Combating misclassification is one of several important steps the U.S. Labor Department is taking to promote shared prosperity and ensure that our economy works for everyone."

Thomas E. Perez, U.S. Secretary of Labor