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BREAKING: McCrory issues executive order on worker misclassification (NC)

Posted by National Alliance for Fair Contracting on

Posted by : Rob Schofield
Friday, December 18, 2015

 

Gov. McCrory took a step in the right direction this afternoon on the issue of employee misclassification – the persistent problem that plagues thousands of North Carolina businesses wherein workers are improperly treated as contractors when they ought to be employees.  As we have reported on multiple occasions this year (and as Raleigh’s News & Observer documented a while back in its special series “Contract to Cheat,”) this is a huge problem that harms workers and honest businesses and robs the state of tax revenue. Doug Burton, a Triangle area contractor put it this way:

“Treating employees as independent contractors when in fact they are regular employees is a fraudulent business practice that has become an epidemic. Some call this ‘misclassification,’ but it is in fact fraud that lets these cheating businesses – many from out of state – off the hook for basic protections, including minimum wage, overtime pay, workers’ compensation, health and safety protections, unemployment insurance, federal and state tax withholding, social security withholdings and matching and more.

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DFW Television Report Puts Spotlight on Worker Misclassification

Posted by National Alliance for Fair Contracting on

by Scott Braddock on Wed, 04/29/2015 – 7:36am

In an explosive investigation that drew the attention of many average Texans over the weekend, WFAA Television in Dallas/Fort Worth put a bright spotlight on the problem of worker misclassification. It’s a problem the Construction Citizen team has exposed for years and we greatly appreciate any time other media outlets take up the cause as well.

This most recent outrage came to light after three men working as independent subcontractors underneath Thanksgiving Tower in Dallas died in a horrific accident. But, the companies involved have denied damages to their families. How can that be?

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Texas Urged to Crack Down on Employers That Misclassify Workers

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By Julian Aguilar

March 15, 2015

 

Workers’ rights groups in Texas are revamping their efforts to increase protections for low-income laborers by urging lawmakers to crack down on employers that intentionally misclassify their employees.

Misclassifying workers as independent contractors – rather than employees – allows employers to avoid paying payroll taxes, overtime and workers’ compensation. The practice also allows employers to skirt federal law that requires new hires to provide proof that they can work in the country legally.

About 35,000 Texas workers were misclassified between 2010 and 2012, according to the Texas Workforce Commission. That includes 4,300 in the construction industry and 4,100 in the health care and social assistance industries. Those workers’ employers should have paid about $2.4 million to the state’s unemployment insurance fund, according to a report by the Legislative Budget Board.

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How New York and Illinois Curb a Key Labor Violation While Other States Fall Short

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This story is part of the series called “Contract to Cheat” published by McClatchy DC. The series tracks how several states fail to prevent construction companies doing public projects from misclassifying their workers as independent contractors 2014 a practice that cheats taxpayers out of billions of dollars each year and denies workers protections.

Read the entire series on McClatchy’s site

On an overcast July afternoon, with the clock ticking on their lunch break, men in blue jeans and hard hats filed out of the four-story Fairfield Inn & Suites under construction near Interstate 270.

Jon Gould, a Carpenters Union job site investigator, stood in the parking lot of a nearby filling station and gazed at the half-finished motel. Three months earlier, on a hunch, investigators from Gould’s union had started videotaping the people building the motel.

The surveillance was taking place to answer a big question: Was Road Runner Construction, of Little Rock, Ark., the motel framing contractor, trying to get away with a practice known as misclassification? Repeated countless times nationwide, often with impunity, the practice enables dishonest companies to underbid honest competitors by categorizing employees as independent contractors-thereby dodging laws that require the payment of state and federal taxes.

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Misclassified Employees Force Taxpayers To Subsidize Costs, Harm Economy

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CHICAGO – Illinois employers wrongly classified nearly 20,000 of their workers as independent contractors rather than full-time employees in 2013, skipping out on more than $250 million in wages and contributions to funds that support laid-off and injured workers, the Illinois Department of Employment Security said today.

Taxpayers ultimately cover the costs of misclassified workers because it robs the state of payroll taxes normally removed from a worker’s paycheck. Those funds typically are not removed from payments given to independent contractors. In some cases, a homeowner could be responsible for costs incurred if a misclassified worker is injured while working on the owner’s dwelling.

“The consequences of misclassification are easy to see when a worker is hurt or an honest business owner is under-bid for a project. What hides in plain sight are the socialized costs that occur when a dishonest employer deceives a customer and cuts corners by not playing by the rules,” IDES Director Jay Rowell said.

“The labor movement is about creating strong communities and protecting workers from unscrupulous employers,” said Chicago Federation of Labor President Jorge Ramirez. “Tactics like worker misclassification erodes that by violating workers’ employment and labor rights.”

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Fedex Settles Million-Dollar Misclassification Case, a Dozen Similar Suits Pending Nationwide

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In a settlement of a federal court lawsuit in Maine, FedEx Ground has agreed to pay $5.8 million in back pay and legal fees to 141 drivers it misclassified as independent contractors.  The lawsuit claimed that FedEx denied overtime pay and made improper deductions in addition to requiring drivers to pay for their expenses.  While there were seven named plaintiffs in the case, only two signed the settlement.  The others felt the amount being paid out by FedEx was too low.

 The federal court judge noted that if the case had gone to trial, damages could have topped $10 million. Nonetheless, the court found the settlement fair and adequate:

 In approving the settlement last week, the court acknowledged that “the proposed settlement…is clearly a compromise that discounts to some degree…the drivers’ total claims” but is a “fair trade-off for the uncertainties of trial and appeal and a prolonged delay in receiving any money. In that regard, the court noted that FedEx Ground has won some independent contractor misclassification cases and lost others.

The court also found that the amount (one-third of the $5.8 million settlement) sought by the lawyers for the class for counsels’ legal fees, costs, and expenses was reasonable.

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Lowe’s Settles Independent Contractor Misclassification Case

Posted by National Alliance for Fair Contracting on
Buying something at Lowe’s? Need help putting it where it belongs, hooking it up, making it work? “Get it installed by a Lowe’s professional,” Lowe’s advertises.

Over 4000 such “Lowe’s professionals” in California are members of the plaintiff class in an action alleging that Lowe’s misclassified its installers as independent contractors, rather than employees, thus depriving them of a variety of employee benefits, from workers compensation insurance coverage to 401(k) plan participation.

Without admitting liability, Lowe’s recently settled the case after mediation for a sum that could be as much as $6.5 million, depending on how many of the installers actually file claims and what damages they can prove (and assuming the proposed settlement is approved by the court). Plaintiffs’ attorneys fees may be up to 25% of that amount.

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California Truck Drivers Go On Indefinite Strike

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More than 120 truck drivers who haul consumer goods from the ports of Los Angeles and Long Beach to retail warehouses launched an indefinite strike on Monday, according to MSNBC, escalating a tumultuous multi-year union organizing effort among the drivers. The consumer brands whose supplies could be affected by the strikes include Skechers shoes, Ralph Lauren, Walmart, and Home Depot, according to a press release from strike organizers.

The core complaint underlying the union drive is that companies like Total Transportation Services, Inc. (TTSI), Green Fleet Systems, and Pacific 9 Transportation deem their drivers “independent contractors” in order to avoid paying overtime and prevent their workers from enjoying various other labor law protections. The drivers say they are misclassified and should be treated as full employees, and have begun to flood the California Labor Commission with wage theft complaints in order to fight the misclassification and seek the pay that the “independent contractor” label has cost them over the years.

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AG Announces Partnership to Combat Misclassification

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NEW YORK – Attorney General Eric T. Schneider­­man has signed a memorandum of understanding that allows his office to cooperate with both the federal and New York Departments of Labor to battle worker misclassification.

The three offices will share information in an effort to catch employers that wrongly classify employees as independent contractors.

The move puts New York on board a federal initiative launched in 2010 as part of the Obama administration’s “Middle Class Task Force.” To date, California, Colo­­rado, Con­­nec­­ti­­cut, Hawaii, Illinois, Iowa, Lou­­isi­­ana, Maryland, Massachusetts, Min­­ne­­sota, Missouri, Montana, Utah and Wash­­ington have signed similar agreements. The initiative claims to have collected $18.2 million in back wages for over 19,000 employees.

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The Death of an Employer Scam

Posted by National Alliance for Fair Contracting on

One of the most pervasive scams that employers use to lower their workers’ wages is misclassification – that is, turning their workers into independent contractors or temps when they are actually employees. Misclassification shouldn’t be mistaken for the whim of an errant employer. On the contrary, it’s a strategy that has been used to transform entire industries.

From an employer’s perspective, the benefits of misclassification are clear. Turning a worker into a temp or a free agent obviates any need to provide him with benefits. It shields the employer from legal liability for health and safety violations, for industrial accidents, or from wage and hour violations. It invariably lowers such workers wages as well. It makes it impossible for workers to form unions.

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