The Government’s Ongoing War Against Worker Misclassification

June 24, 2010
5 min read
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The government’s war against W-2 Employees being classified as Independent Contractors seems to get hotter by the day. In the latest strike against misclassification, the Senate Committe on Health, Education, Labor, and Pensions (HELP) held a hearing entitled “Leveling the Playing Field, Protecting Workers and Businesses Affected by Misclassification.” According to the Washington DC Employment Law Updates‘ synopsis of the hearing, HELP Committee Chairman Tom Harkin (D-IA) stated that nearly 10.3 million workers are classified as Independent Contractors and 30% of businesses have misclassified employees as Independent Contractors.The hearing focused on numerous legislative and regulatory efforts already in progress to combat misclassification, many of which FoxHire highlighted in previous blog posts:

  • The Employee Misclassification Prevention Act introduced in the House and Sentate would require employers to post a notice informing workers of the importance of being properly classified and their right to question their classification.
  • The Department of Labor (DOL) launched the “We Can Help” campaign aimed at reaching workers in low-paying jobs. It provides a Web site and hotline for workers to report Wage and Hour violations.
  • The DOL has also hired more investigators to target misclassification of workers and launched the“Plan/Prevent/Protect” initiative that will require employers to create plans to prevent employment law violations, including those regarding the correct classification of workers under the Fair Labor Standards Act (FLSA).
  • The IRS is working on a nationwide tax audit program that will attempt to penalize companies that fail to pay the employer share of taxes on misclassified employees.

Again, it is in your best interest to help your client companies become aware of the dangers of misclassifying workers and help them comply, particularly by offering to convert their Independent Contractors to W-2 Employees through a contract staffing back-office service provider, like FoxHire, which can become the W-2 Employer and and handle all taxes, benefits, etc.

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