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June 09, 2007

Mislabelling workers as contractors

More good work from New York Times labor reporter Steven Greenhouse, Investigating Mislabeling Workers:

Gov. Eliot Spitzer is planning to step up enforcement against thousands of companies that illegally misclassify workers as independent contractors to cheat on taxes and skimp on employee benefits, the state labor commissioner said yesterday.

The commissioner, M. Patricia Smith, said the Spitzer administration was focusing on misclassification because it costs the state a significant amount in unemployment insurance taxes and workers’ compensation premiums while denying many workers overtime pay.

“We are developing a plan to address this law-breaking practice, which has been left unchecked for 12 years,” Ms. Smith said. She refused to disclose details because the administration has not finished developing the enforcement plan.

In February, researchers from Cornell University issued a report saying that 704,000 of the seven million private-sector workers in New York State were misclassified as independent contractors and that as a result the state was being shortchanged $175 million in unemployment insurance taxes each year. [NYT]

It's nice to see that Spitzer is keeping up the committment he showed as Attorney General to combating abuses against workers in our state.

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Comments

I'm thrilled to see this. Employers regularly mislead employees about the extent of their own authority to designate employee/IC status, and employees have no idea that their employers are unfairly evading the law.

I'm curious as to whether they will crack down on some of the highly or fairly-paid "permalance" employees at many large media companies? What are the limitations? I'd love to see full-time jobs restored to those organizations as well, but I doubt they will be the subject of investigation in this case.

In February, researchers from Cornell University issued a report saying that 704,000 of the seven million private-sector workers in New York State were misclassified as independent contractors and that as a result the state was being shortchanged $175 million in unemployment insurance taxes each year.
Are the researchers claiming that the 704,000 workers are nonetheless entitled to unemployment insurance benefits?

Failing that, what is the basis for the claim that shortchanging is taking place? Sounds like a car insurance company complaining that somebody who doesn't drive (and therefore doesn't pay premiums) is shortchanging them.

Insurance plans generally, and UI in particular, do better the more people are enrolled in them. Thus they suffer somewhat when people who are supposed, by public policy, to be enrolled, aren't. But unless the $175 million figure is meant to be an estimate of that loss, I consider it bogus. Only if the misclassified workers can actually claim UI benefits does it make sense to describe non-payment of premiums as shortchanging.

Every car service (neighborhood taxi) in NYC classifies the drivers as Independent Contractors. Which is complete bullshit as the employer controls the hours they work, and every detail of how they do the job.

Ted Powell is probably correct in that the State was not short changed at all in the area of Unemployment, since none of these people probably claimed benefits --the workers have a beef, not the ravenous and greedy state of NY.

The workers would also have been cheated out of Workers Compensation benefits--not the state. No small matter, as car service drivers, who work 12 hour shifts, are always vulernable to accidents in the ramshackle vehciles they are typically given. Along with the constant threat of armed robbery, which happened to a friend of mine some years back.

The Brooklyn car service owner could have cared less--they docked from his remaining pay the amount stolen by the armed robbers.


Architects are very guilty of using full time outsource constractors who are essentially employees.

It's a scam.

It would help--a lot--if there was a bright-line definition of an employee and a contractor.

But the new business-think and business-speak tells us that we workers, mere employees, who are lucky to have jobs in the first place (thanks be to Big Business - who act like they don't need labor; that they only hire labor for charitable reasons) need to start thinking about ourselves as contractors, and CEOs of our own selves. Expect to change careers 3 or more times in a lifetime, is now the word on the street. The company man, and company loyalty is out the window. Every man for himself. Social Darwinism. Ayn Rand would be proud, were she not worm meat.

The underlying concept of Republicanism is that you, if your not one of them, are lucky just to have a job, while paying lip service to "America" is the land of opportunity. They are masters of Orwellian fear mongering. We need them to protect us...from what? From them.

The software industry (out West, anyhow) is (in)famous for the "perma-temps" who have been paid fairly well- but operate without any "benefits" package at all (hey- they're mostly young, and think that they're immortal... and won't ever get sick until after they've gotten rich... or hired "full-time").
Re .."need to start thinking about ourselves as contractors, and CEOs of our own selves..."
Right... and when we do, we may find that the actual Laborers are the principal long-term necessity; and that management, like good software, should only be needed to get things started (and that, like good software, once it's understood by the ones doing the work, it can be adapted without the ongoing "guidance" of management). It'll be a great day when most "management' is done by telecommuting temp consultants...
Re .."Are the researchers claiming that the 704,000 workers are nonetheless entitled to unemployment insurance benefits?"
That's what it sounds like to me... and it's actually not a lot of money- about $250 per misrepresented worker- but, as pointed out, these systems work better when there's a big enrollment. Chances are, these people's claims would eventually be allowed- or some other safety net program would be put in motion- if needed. I wonder if these employers have "explained" to their "independent contractors" that they're responsible for their own payments to the UI system... ^..^

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