September 11, 2010 (Press-News.org) Employee misclassification can take place in several situations, including when a worker who should be classified as an employee of a business is illegally and improperly treated as a self-employed independent contractor. While some cases of misclassification are the result of honest mistakes or misapplication of employment laws, many businesses deliberately misclassify workers in order to avoid the taxes, benefits and other expenses that employers are legally obligated to pay for their employees.
Companies that engage in this practice save money for themselves at the expense of many:
- Their workers
- The government
- Law-abiding competitors whose profits may be lower as a result of properly fulfilling their compensation and tax obligations
Legislation proposed earlier this year would amend the Fair Labor Standards Act of 1938 to crack down on employers that engage in illegal employee misclassification. The bill, called the Employee Misclassification Prevention Act of 2010 (EMPA), contains a number of provisions designed to reduce misclassification, increase regulation of worker classification practices, and set forth specific penalties for businesses that do not maintain compliance.
Effects of Employee Misclassification on Workers
Workers who are misclassified as independent contractors are at a distinct disadvantage when compared to those who are properly classified as employees. Standard employee protections like minimum wage and overtime statutes, safety regulations and anti-discrimination laws do not apply to independent contractors. Misclassified workers are also denied basic benefits like heath care, vacation time and sick leave. In addition, businesses do not deduct taxes, 401(k), Social Security or Medicare payments from the paychecks of independent contractors.
Because employers do not pay unemployment taxes to the government for independent contractors, workers who are misclassified in this way cannot obtain unemployment benefits if they lose their jobs. Similarly, independent contractors who are injured at work are not eligible for workers' compensation benefits.
With the economy in its present state, millions of Americans are struggling either to find work or hold on to the jobs they already have. As a result, workers have relatively little bargaining power in the workplace. Because of this imbalance, there is concern among lawmakers that even those workers who know that they have been misclassified may be reluctant to speak up and challenge their classifications. Provisions of the EMPA would address that concern by establishing anti-retaliation protections for workers and requiring that businesses notify workers in writing of their status as employees or independent contractors.
Effects of Employee Misclassification on the Economy
In addition to putting workers at a disadvantage, the practice of misclassifying would-be employees as independent contractors costs the state and federal governments billions of dollars each year. The federal Government Accountability Office (GOA) estimated that employee misclassification cost the United States government $2.72 billion in revenue from Social Security, unemployment and income taxes in 2006 alone.
According to a recent congressional report, misclassification leads to revenue loss through two different avenues: Businesses evade their tax obligations by improperly classifying workers as independent contractors, while workers classified as independent contractors are less likely to pay their own taxes in full than employees who have their earnings reported by an employer. Legislators are hopeful that the EMPA will stem the flow of revenue loss through both of these avenues.
Along with protecting workers and promoting competitive fairness among businesses, another major objective of the EMPA is to narrow the tax gap and recapture revenue that the government loses due to employee misclassification.
Criticism of the EMPA
Opponents of the EMPA argue that compliance would be prohibitively expensive for many small business owners. They also contend that the legislation would burden business owners with excessive paperwork, imposing steep fines for improper recordkeeping rather than focusing directly on the problem of misclassification. United States Senator Mike Enzi (R-Wyoming) criticized this aspect of the bill, saying it could result in "nonsensical" fines to businesses for failing to notify employees that they are employees.
Under the terms proposed in EMPA, a business would pay $1,100 per person for initial misclassification of workers or recordkeeping violations. Penalties would increase to $5,000 per person for persistent or willful violations.
Not All Independent Contractors are Misclassified
While many independent contractors should rightfully be classified as employees, it is important to keep in mind that this is not true in every case. Businesses often enlist contractors to perform a variety of tasks, and not every business that does so is engaged in tax evasion, nor do they intend to break any state or federal law. The key distinction between employees and independent contractors is the extent to which the business has the right to exert control over the worker; an employer generally has the right to exert more control over an employee than a contractor, for example by dictating the hours worked and the manner in which tasks are completed.
Article provided by Marlin and Saltzman, LLP
Visit us at www.marlinandsaltzman.com
The Employee Misclassification Prevention Act of 2010
Employee misclassification can take place in several situations, including when a worker is improperly treated as a self-employed independent contractor.
2010-09-11
ELSE PRESS RELEASES FROM THIS DATE:
BP Oil Spill Victims Continue to File for Damages
2010-09-11
A seven-member federal judicial panel in Idaho recently heard arguments about which jurisdiction is best suited for a consolidation of more than 300 lawsuits against BP and other companies involved in the Gulf of Mexico oil spill.
According to the Associated Press, some of the nearly two dozen attorneys argued that it might be unfair to move a consolidated case to Houston, where BP would like the proceedings to take place. Most of the plaintiffs appeared to favor New Orleans, as does the Justice Department.
No matter where the case is finally heard, it's clear that ...
The New Changes in Florida's Complicated Child Support Laws
2010-09-11
During the 2010 session, the Florida legislature considered two bills aimed at making significant changes to Florida's alimony and child support laws. Eventually, the two bills were merged into one and the new bill passed both the Senate and House before being signed into law by the Governor. While the alimony modifications became effective July 1, 2010, the child support changes begin to take effect on October 1. The yet-to-be-tested child support requirements include several major changes. For parents affected by the new law, these changes will add more wrinkles to the ...
NY Pilot Program Aimed at Reducing Preventable Medical Mistakes
2010-09-11
Each year in the United States, it is estimated that between 44,000 and 98,000 patients die as a result of a preventable medical error, making it the 8th leading cause of death in the country. Medical errors also are responsible for causing injury to one out of every 25 hospital patients and cost the U.S. economy between $17 and $29 billion every year.
This fall, five New York City-area hospitals are set to begin a pilot program focused on improving patient safety and reducing preventable medical mistakes, and by doing so reducing costs. During the pilot, the hospitals ...
Financial Reform Legislation and Transparency in Hedge Fund Management
2010-09-11
With the economy sputtering, seeking to recover from the Great Recession that followed the financial meltdown of 2008, Congress worked for more than a year to develop comprehensive financial reform legislation. The result was the Dodd-Frank Wall Street Reform and Consumer Protection Act, which President Obama signed on July 21.
Dodd-Frank contains many features intended to require more transparency in financial transactions, so that elaborately packaged products do not create and disguise excessive risk that can harm unwary investors and consumers.
The concerns that ...
Tesco Launches First Ever Shopping App for iPhone
2010-09-11
Tesco has announced that it is launching its first ever shopping app for iPhone. The Tesco grocery app joins the family of hugely successful Tesco apps, including Clubcard and the Winefinder, which together have now reached over one million downloads.
The announcement represents a landmark moment for the supermarket, as this is the first time that Tesco has created a shopping portal that is specifically optimised for the iPhone.
Laura Wade-Gery, CEO for tesco.com comments: "We're always looking for ways to make life easier for customers. The iPhone app creates a ...
Team Sky to Help Save One Billion Trees in the Amazon
2010-09-11
For the first time ever, riders competing in The Tour of Britain for Team Sky will be raising awareness of deforestation in the Amazon by wearing a Sky Rainforest Rescue inspired kit. The tour kicks off in Rochdale on Saturday 11th September and ends in London the following weekend.
Sky Rainforest Rescue is a three year campaign between Sky and WWF to help save a billion trees in the state of Acre, northwest Brazil. Deforestation is now responsible for roughly 15% of global greenhouse gas emissions and an area the size of three football pitches is destroyed every minute ...
Topshop Announces the Arrival of New Designers Online
2010-09-11
Topshop has welcomed a number of collections and collaborations from new designers to be introduced online and at the company's flagship Oxford Street store.
While new clothing projects will launch throughout the year, September sees the arrival of new collections from Ashish and Michael Van Der Ham.
Michael Van Der Ham will be creating a range of multi-coloured silk scarves which will feature trompe d'oeil patchwork and fringe detailing. This is the first time Topshop has worked with Michael Van Der Ham, and follows his recent NEWGEN sponsorship win.
Ashish will ...
Displaysense Reports Empty Shops Proving an Unlikely Source of Business
2010-09-11
Displaysense, the UK's leading supplier of display products, has recently seen a surge in customers ordering display items with the intention of using them for small, short-term projects within empty high street lots.
The company first noticed the wave of customers using empty sites when large orders of mannequins and vintage busts were ordered for 24 hour exhibitions set up in these vacant, yet premium high street sites.
A rising number of people organising fashion and art exhibitions have been ordering from the UK based display company after securing deals with ...
The International Recording Artist Alessandro Bottura Released His New Classic Jazz Fusion CD "Morning Grooves Special Digital Edition" Featuring The Hit Instrumental Song "MayDay Mayhem RMX" For 2010
2010-09-11
The multi-talented Italian Bass Player Alessandro Bottura has released a remix of his CD entitled "Morning Grooves," which features his RadioIndy chart-topping single "MayDay Mayhem RMX." The album contains eleven smooth fusion songs of rock, jazz, and pop instrumentals, including another radio favorite "Stern Memories RMX" that has listeners mesmerized when they hear the hard hitting bass playing reminiscent of the Jaco Pastorius masterpieces of early 70's.
"Morning Grooves Special Digital Edition" was recorded in Modena, Italy and co-produced via the internet through ...
Best Casino Online.com Agreement Produces World's Largest Casino Bonus
2010-09-11
The popular portal Best Casino Online (www.bestcasinoonline.com) has partnered with Go Casino (www.gocasino.com) to offer their readers an exclusive casino bonus worth up to $21,000 - the largest casino bonus currently available on the Internet.
The ground breaking deal was confirmed today and is expected to be hugely popular with casino gamers around the world.
"Go Casino is generally regarded as the best online casino out there, so we're delighted to come to agreement with such a high quality establishment" a spokesman for Best Casino Online said yesterday. "We ...
LAST 30 PRESS RELEASES:
Reality check: making indoor smartphone-based augmented reality work
Overthinking what you said? It’s your ‘lizard brain’ talking to newer, advanced parts of your brain
Black men — including transit workers — are targets for aggression on public transportation, study shows
Troubling spike in severe pregnancy-related complications for all ages in Illinois
Alcohol use identified by UTHealth Houston researchers as most common predictor of escalated cannabis vaping among youths in Texas
Need a landing pad for helicopter parenting? Frame tasks as learning
New MUSC Hollings Cancer Center research shows how Golgi stress affects T-cells' tumor-fighting ability
#16to365: New resources for year-round activism to end gender-based violence and strengthen bodily autonomy for all
Earliest fish-trapping facility in Central America discovered in Maya lowlands
São Paulo to host School on Disordered Systems
New insights into sleep uncover key mechanisms related to cognitive function
USC announces strategic collaboration with Autobahn Labs to accelerate drug discovery
Detroit health professionals urge the community to act and address the dangers of antimicrobial resistance
3D-printing advance mitigates three defects simultaneously for failure-free metal parts
Ancient hot water on Mars points to habitable past: Curtin study
In Patagonia, more snow could protect glaciers from melt — but only if we curb greenhouse gas emissions soon
Simplicity is key to understanding and achieving goals
Caste differentiation in ants
Nutrition that aligns with guidelines during pregnancy may be associated with better infant growth outcomes, NIH study finds
New technology points to unexpected uses for snoRNA
Racial and ethnic variation in survival in early-onset colorectal cancer
Disparities by race and urbanicity in online health care facility reviews
Exploring factors affecting workers' acquisition of exercise habits using machine learning approaches
Nano-patterned copper oxide sensor for ultra-low hydrogen detection
Maintaining bridge safer; Digital sensing-based monitoring system
A novel approach for the composition design of high-entropy fluorite oxides with low thermal conductivity
A groundbreaking new approach to treating chronic abdominal pain
ECOG-ACRIN appoints seven researchers to scientific committee leadership positions
New model of neuronal circuit provides insight on eye movement
Cooking up a breakthrough: Penn engineers refine lipid nanoparticles for better mRNA therapies
[Press-News.org] The Employee Misclassification Prevention Act of 2010Employee misclassification can take place in several situations, including when a worker is improperly treated as a self-employed independent contractor.