Federals and State Officials Crack Down on Misclassification of Workers

Corporations that misclassify employees as “independent contractors” deprive workers of basic legal protections and shift billions of dollars in costs to law-abiding taxpayers.

Online PR News – 11-May-2010 – – Corporations that misclassify employees as 'independent contractors' deprive workers of basic legal protections and shift billions of dollars in costs to law-abiding taxpayers.

The Internal Revenue Service estimates employers misclassify more than 3 million employees, while a study by the U.S. Department of Labor revealed up to 30 percent of employers audited in nine states misclassified employees.

Certain industries appear to be more prone to misclassification than others. Trucking and construction companies have seen a rise in the number of misclassification cases.

As a general rule, a person who works at the direction and control of another is considered 'employee.'

In contrast, an 'independent contractor' is paid to provide a particular service or product, but its day-to-day work activity is not supervised by the company paying for the service or product. Independent contractors are not protected by laws governing minimum wages, overtime, family or medical leave, workplace health and safety, unemployment insurance, or workers' compensation insurance.

Fortunately, government officials are stepping up enforcement of laws against employers that resort to this practice.
At the federal level, President Obama recently called for an additional $25 million appropriation for misclassification initiatives. Under the plan, the U.S. Department of Labor will strengthen investigation and enforcement, provide grants to help states address the problem, and slap heavy fines on businesses that violate the law. Meanwhile, Congress is working on new legislation to increase penalties and ensure that workers are notified of their legal rights.

In Michigan, the Governor created a special Interagency Task Force on Employee Misclassification. This task force is developing strategies to coordinate and strengthen enforcement mechanisms in the state and with other jurisdictions, and make recommendations for state legislative action.

One of the many consequences of misclassification is that it deprives workers who suffer on the job injuries of the right to workers' compensation benefits.

Under Michigan law, nearly all businesses must carry workers’ compensation insurance coverage. If an employee suffers a work-related injury, he or she is eligible for workers' compensation benefits, including wage loss, medical treatment, and rehabilitation services.

Workers’ compensation is a type of 'no fault' insurance coverage. In other words, an employer cannot deny workers' compensation by contending that the worker was injured as a result of carelessness. Instead, the law requires the employer to provide medical treatment immediately after the worker is injured, and to pay wage loss benefits if the injury prevents the worker from returning to employment for more than a week.

"A lot is at stake when you are unable to work and wrongfully denied workers’ compensation benefits. Families often depend on the income that an injured worker lost," says Mark Bernstein, Michigan workers' compensation attorney. "Contact a lawyer if you are denied workers' compensation benefits."

If you or a loved one was injured at work and denied workers' compensation benefits, you should protect your legal rights by contacting an experienced Michigan workers' compensation lawyer.

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