For years the Department of Labor (DOL) has been operating a cooperative program with several states to crack down on worker misclassification — labeling actual employees as independent contractors to avoid paying taxes and benefits — and now the agency is targeting $10.2 million in aid to those states to speed up enforcement efforts.
The funds will be used to increase the ability of state unemployment insurance (UI) tax programs to identify instances where employers improperly classify employees as independent contractors or fail to report the wages paid to workers at all, according to a DOL statement. The states that were selected to receive these grants will use the funds for a variety of improvements and initiatives, including enhancing employer audit programs and conducting employer education initiatives.
Four states will be eligible for “bonuses” totaling $2 million due to their “high performance or most improved performance in detecting incidents of worker misclassification.” The remaining $8.2 million will be shared among the other 19 states participating in the program.
“This is one of many actions the department is taking to help level the playing field for employers while ensuring workers receive appropriate rights and protections,” said Secretary of Labor Thomas E. Perez in a statement issued by the DOL. “Today’s federal grant awards will enhance states’ ability to detect incidents of worker misclassification and protect the integrity of state unemployment insurance trust funds.”
Employers, protect yourselves against DOL audits and fines by getting a copy of our Worker Misclassification Prevention Kit.