New York is now collaborating with the federal government to go after employers that misclassify employees as independent contractors.
The US Department of Labor’s Wage and Hour Division (WHD) on November 18 entered into agreements with New York’s attorney general and state labor department to coordinate investigations, make referrals to one another, share data and take other actions to combat worker misclassification.
“When employers misclassify employees as independent contractors for their own gain, they hurt their employees and they even hurt other businesses – the law-abiding employers who don’t steal from their employees,” New York State Labor Commissioner Peter Rivera said in a statement. “I’m proud of this partnership we’re beginning here today to root out bad actors and bring them to justice.”
New York is the 15th state to enter into such a partnership with the federal government. California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington also have joined the DOL’s Misclassification Initiative.
The initiative started in 2011, when the DOL joined forces with the Internal Revenue Service to “work together and share information to reduce the incidence of misclassification of employees, to help reduce the tax gap, and to improve compliance with federal labor laws.”
Since then, the amount of back wages WHD has recovered for minimum wage or overtime violations of the Fair Labor Standards Act resulting from workers not being classified as employees has nearly doubled, to $18.2 million over the past two years.
The WHD says on its website that it is “actively pursuing” partnerships with other states.
An employer that misclassifies an employee as an independent contractor faces a variety of liabilities that can include the payment of back taxes plus interest, unpaid overtime and state workers’ compensation premiums, plus the provision of health and welfare benefits.