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Workplace Fraud: Contractors Who Are Really Employees11 Sep 2013 07:37 am

20130723-perezbiophoto-200.jpgThe new head of Department of Labor Tom Perez came out swinging at a meeting in front of labor leaders yesterday.

This from a Wall Street Journal article published this morning:

Mr. Perez, addressing the AFL-CIO’s quadrennial conference here, said the Labor Department would help restore the middle class by defending collective-bargaining rights, aggressively enforcing wage laws and taking steps to improve workplace safety.

He also said he would crack down on employers who unlawfully misclassify workers as contractors instead of as employees—calling the practice “workplace fraud” because it deprives those workers of benefits such as unemployment insurance.

Following the economic downturn, many employers upped their enlistment of socalled contract workers, also known as contingent employees. For some businesses, these contingent workers have become a permanent solution, eliminating a huge swath of full-time jobs with benefits, according to labor and business experts.

Just check any job search site and type in “freelance,” “temporary” or “contractor,” and you easily can find hundreds of hits in a broad array of industries.

But such a “transient” work force could end up hurting workers because many of the protections and benefits of being full-time employees, including unemployment insurance and some labor laws, don’t apply to free agents. Contingent workers typically don’t get sick or vacation days, retirement accounts or health coverage. “Companies want a more flexible work force, but we have to think about what’s the next way we’re going to protect people,” Sara Horowitz, founder of Freelancers Unions, told me a while back.

Sometimes contract workers are misclassified as independent contractors because employers don’t want to pay benefits. Employers who misclassify an employee can face fines and back taxes and may have to pay benefits such as overtime or retirement.

So, how do you know if you’re misclassified? (more…)


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