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Missouri Falls Behind Other U.S. States in Indentifying Employee Misclassification

October 13, 2010

As Carson, California employment attorneys, we have recently read about an audit performed in Missouri, that held the state's labor officials responsible for identifying fewer cases of employee misclassification than every U.S. state besides Iowa, during periodic checks from 2005 to 2009.

According to Businessweek, Missouri has long fallen behind other states in tracking down employers who misclassify workers as independent contractors instead of employees, to avoid paying taxes, workman's compensation payments, and other employee benefits. The Department of Labor and Industrial Relations reportedly found the national average to be 1.36 misclassified worker per check, where the average in Missouri was 0.14 per check.

The Missouri state labor officials claim to have been working for over two years to identify more workers who have been misclassified, by expanding their staff and changing procedures. The Missouri labor department director Larry Rebman stated that the number of misclassified workers identified by the department has increased from 180 in 2008 to over 2,300 in 2010, and that collections have doubled. Rebman also claimed that the labor department is leveling the playing field by finding the employers who are cheating the employment system.

As our Riverside employment attorneys have reported in a recent blog, when an employer engages in employee misclassification, workers not only miss out on important employment benefits like workers' compensation and social security, but they can also pay higher taxes on income. The state can also lose money.

State labor officials have projected that employee misclassification costs the state unemployment fund $10 million in contributions every year, the workman's compensation fund $215,000 and the Second Injury Fund $646,000. It also reportedly caused the underreporting for taxes of over $420 million in wages. A federal government review found in an estimate that employee misclassification costs the government $1.6 billion every year.

The U.S. Department of Labor (DOL) recommends that states conduct only 10 percent of employee misclassification checks on a random basis, and put more focus on targeting industries who are more likely to have misclassification problems. The Missouri state audit reportedly revealed that the state primarily conducted random checks of employers, with no follow-up checks on those who were found guilty of engaging in the misclassification of employees. The state labor department now claims to follow the DOL recommendation, and is working to focus on employers with the most discrepancies, as well as creating a plan for follow-up reviews.

Our Anaheim-based attorneys at Howard Law, PC are committed to representing individuals who have experienced employee misclassification, and other violations of California Labor Codes in Orange County and throughout Southern California. Contact us today, for a free consultation about your rights.

Audit: Missouri Found Fewer Misclassified Workers, Bloomberg Businessweek, October 5, 2010

Related Web Resources:

Department of Labor (DOL): Wage and Hour Division (WHD)

Missouri Department of Labor and Industrial Relations