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The Department of Labor (DOL) is requesting $46 million in the Fiscal Year 2012 budget to allow the agency to “redouble its efforts to combat worker misclassification.”

Over the past couple of years, the DOL has been cracking down on employers who misclassify workers who should be W-2 employees as 1099 independent contractors.  Last year, the agency hired 350 agents to investigate suspected misclassification.

The DOL plans to continue this push in FY 2012 by launching a new multi-agency Misclassification Initiative which is intended to do a number of things, including the following:


  • Provide grants to help states address worker misclassification within their unemployment insurance programs.
  • Create an incentive program that will reward states that successfully combat worker misclassification.
  • Provide the Wage and Hour Division (WHD) with over $15 million and 107 additional personnel to support an additional 3,250 msclassification investigations.

The take-away point here is that the DOL is not going to let up on misclassification enforcement. So if you know or suspect that a client is misclassifying employees as independent contractors, you may want to make them aware!

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