This past September California adopted a new law specifically to combat the misclassification of employees as independent contractors.
Lear more about how California’s government agencies are implementing it, and how it could help address rampant misclassification of employees…
How California’s AB5 protects workers from misclassification
“The bill requires all private construction employers statewide to run new hires through a federal E-Verify system, an electronic database that checks the legal work-status of new hires by comparing the employees’ information to that of the Social Security Administration and federal immigration officials. More than 20 states have mandated the use of E-Verify in some or all industries.”
Signatory Wall and Ceiling Contractors Alliance (SWACCA) President Matt Townsend testified before the U.S. House of Representatives Education and Labor Committee on the impacts of misclassification in the construction industry on Sept. 26, 2019.
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“Companies that illegally misclassify employees as independent contractors are stealing from workers, evading taxes, and gaining an unlawful edge over competitors,” said AG Racine. “The Office of the Attorney General commissioned this study to better understand the dynamics of worker misclassification and how we can fight it—and the economic analysis shows just how much this illegal practice costs workers and the community. Indeed, my office has already taken several companies to court to stop this kind of payroll fraud, and we will continue to act to protect workers when businesses violate the District’s labor laws.”
https://oag.dc.gov/release/ag-racine-releases-report-payroll-fraud-district
“This agreement grants new powers to each state, including strategic data-sharing, interstate case referrals, and joint investigations that will greatly impact wage claim investigations, worker misclassification, workplace safety efforts, and other labor-related compliance matters.”
https://www.nj.gov/labor/lwdhome/press/2019/20190710_tristatealliance.shtml
New Jersey’s Task Force on Employee Misclassification released a comprehensive report detailing efforts to curtail the widespread and illegal practice of misclassifying employees as independent contractors.
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“Confronting Misclassification and Payroll Fraud, published by Harvard Law School, has found a growing number of innovative practices at the state agency level to combat misclassification and payroll fraud.”
A brother and sister who operate a construction company in Paramount, CA admit to commiting fraud and embezzlement resulting in a loss of more than $500,000 to the California State Compensation Insurance Fund.
“Construction Industry Tax Rip-Off Estimated at $2.6 Billion – 1.2 Million Construction Workers Paid Off-the Books. To bring more attention to the trouble tax fraud causes in our communities, UBC affiliates in the United States and Canada are planning Days of Action for April 15, when individual tax returns are due in the U.S., and the days leading up to it.”
Former Obama US Department of Labor official Patricia Smith speaks at the New Jersey Task Force on Employee Misclassification. “Misclassification, by itself, is not illegal,” she said. “What’s illegal is the consequences of misclassification. When you find misclassification, you’re going to have, depending upon what you’re enforcing, a remedy.”
No Misclassification! 