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Employer-Free R
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Traven
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May 28, 2008 13:03 PDT
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'Independent Contractor’Another Word for Employer-Free
Ride
Posted By Mike Hall On May 27, 2008 @ 3:49 pm In Legislation
& Politics | 2 Comments
New legislation
would toughen penalties and crack down on employers who take away
workers’ benefits and rights by misclassifying them as “[1]
<a href="http://blog.aflcio.org/2008/04/17/bctd-slams-misclassification-scam/">
independent contractors”
instead of regular employees.
When workers are misclassified
as independent contractors, they pay higher taxes and lose important
rights, such as workers’ compensation coverage, minimum wage and overtime
protections, family and medical leave and the right to organize and
collectively bargain.
The problem is especially
serious in the construction industry and is growing in the high-tech,
communications, trucking and delivery services, janitorial services,
agriculture, home health care, child care and other industries.
The bill (H.R. 6111) was
introduced last week by Reps. Lynn Woolsey (D-Calif.) and Robert
Andrews (D-N.J.). Says Woolsey, chair of the House Subcommittee on
Workforce Protections:
Employers who misclassify their employees as independent contractors
rob workers of needed pay and benefits and cost government at all levels
substantial uncollected revenues. Despite, this enormous problem, the
Department of Labor has failed not only to crack down on this practice by
enforcing current laws, but has failed to coordinate with other agencies
to address the issue.
There are more than 10 million workers classified as independent
contractors and studies show a large percentage for those workersas many
as 3.4 millionare misclassified and should be regular employees. A
Massachusetts study found 11.4 percent of the state’s construction
workers had been misclassified as independent contractors between 2001
and 2003. And an Illinois study found that misclassification had
increased by 55 percent between 2001 and 2005.
Employers gain a big
advantage. They can avoid paying Social Security, Medicare and
unemployment payroll taxes, as well as workers’ compensation premiumsand
they may be able to exclude the workers from health and pension benefits
and avoid having to withhold income taxes. With far lower worker costs,
crooked employers can undercut honest employees.
By improperly categorizing
employees as independent contractors, employers can avoid payroll
taxessome $34.7 billion in unpaid taxes between 1996 and 2004 as a
result of the misclassification of workers, the bill’s backers say.
Andrews, chairman of the Health, Employment, Labor and Pensions
Subcommittee, says the bill is:
pro-employee, pro-employer and pro-taxpayer. The bill will protect
employee benefits, remove incentives for employers to misclassify their
workers, and ensure that bad employers don’t line their own pockets with
unpaid payroll taxes.
Along with imposing stronger penalties for employers who misclassify
their workers, the legislation would require employers to notify
employees of their independent contractors status and give workers the
right to challenge the classification. It also requires the U.S.
Department of Labor to conduct targeted audits on employers in industries
that frequently misclassify employees and allows the Labor Department and
the Internal Revenue Service to share information.
A provision in the tax code
allows employers to escape paying employment taxes when they misclassify
workers as independent contractors instead of employees. Legislation in
the House and [2]
<a href="http://blog.aflcio.org/2007/09/14/bill-would-end-employers-worker-misclassification-scam/">
Senate (H.R. 5804 and S.
2044) would eliminate that tax provision.
Earlier this year, as part of
the AFL-CIO Building and Construction Trades Department’s ([3]
<font face="Times New Roman, Times" size=3>
BCTD’s) legislative
conference, hundreds of union members [4]
<a href="http://blog.aflcio.org/2008/04/17/bctd-slams-misclassification-scam/">
went to Capitol Hill to
urge their lawmakers to help put an end to the independent contractor
scam.
Article printed from AFL-CIO NOW BLOG:
http://blog.aflcio.org
URL to article:
<a href="http://blog.aflcio.org/2008/05/27/independent-contractoranother-word-for-employer-free-ride/" eudora="autourl">
http://blog.aflcio.org/2008/05/27/independent-contractoranother-word-for-employer-free-ride/
URLs in this post:
[1] independent
contractors:
<a href="http://blog.aflcio.org/2008/04/17/bctd-slams-misclassification-scam/" eudora="autourl">
http://blog.aflcio.org/2008/04/17/bctd-slams-misclassification-scam/
[2] Senate:
<a href="http://blog.aflcio.org/2007/09/14/bill-would-end-employers-worker-misclassification-scam/" eudora="autourl">
http://blog.aflcio.org/2007/09/14/bill-would-end-employers-worker-misclassification-scam/
[3] BCTD:
http://www.bctd.org/
[4] went to Capitol
Hill:
<a href="http://blog.aflcio.org/2008/04/17/bctd-slams-misclassification-scam" eudora="autourl">
http://blog.aflcio.org/2008/04/17/bctd-slams-misclassification-scam
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