Misclassification Prevention – Help is on the Way

Worker misclassification has been a problem for this nation’s workforce for a long time, one that my office and others in the Department have been working hard to address over the past four years. If someone is working and getting paid for that work, why should government care about whether the worker is an independent contractor or an employee?

It matters because worker misclassification deprives the most vulnerable of our workforce of basic worker protections.  Misclassified workers are often denied access to critical benefits and protections – such as family and medical leave, overtime, minimum wage and unemployment insurance – to which they are entitled. That means employees don’t receive a fair wage, are not protected when injured on the job, and possibly do not receive unemployment benefits when they are needed most.

Equally important, employers who try to follow the law cannot compete on a level playing field with employers that violate the law by misclassifying workers.

The President and Congress recognized that this is a problem and included $10.2 million in the Consolidated Appropriations Act of 2014 that specifically targets funding to state unemployment insurance (UI) agencies for developing misclassification detection and prevention strategies.   This $10.2 million funding opportunity provides incentives to state UI agencies to employ new and innovative and effective strategies to prevent misclassification, such as automation to help select employers for audit that are more likely to be misclassifying workers, education and outreach strategies for both employers and state staff; and hiring more staff to conduct investigations of worker misclassification.

Following the guidance in Unemployment Insurance Letter No. 18-14, two states were awarded grants for achieving high performance in identifying misclassification in their audits; two states were awarded grants for achieving the most improved performance; and 19 states were awarded grants in a competitive funding process.

What benefits do we expect to see from the additional grants?  The states receiving grants now have the resources to increase the number of employer audits they conduct and to deploy new strategies that discover more misclassified workers. The most important bottom line is that, with the help of these grants, previously misclassified workers will be afforded the worker protections to which they are entitled.

Source: Department of Labor