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Senator Harkin Aims to “Level the Playing Field” to Protect Workers And Businesses from Employee Misclassification

June 23, 2010

According to U.S. Senator Tom Harkin, (D-IA) who recently discussed the issue of employee misclassification at the U.S. Senate HELP Committee hearing, over 10.3 million workers in this country are incorrectly labeled as independent contractors--which amounts to around 7.3 percent of the nation's workforce. Harkin stated that the scope of the employee misclassification problem is "staggering." The U.S. Department of Labor (DOL) supported this statement, as a recent study found that as many as 30 percent of this country's businesses misclassify employees as independent contractors.

As our Southern California Employment Attorneys discussed in a recent blog, employee misclassification is a frequent and growing problem--as misclassified workers don't receive the same protections under our laws, like minimum wage and overtime payments, meal periods and rest breaks, tax responsibilities, safety and health laws, workers' compensation, antidiscrimination protections, along with other federal and state employment laws and regulations.

Harkin claimed that employee misclassification is also costing the state and federal governments billions of dollars in unpaid revenues, and hurting businesses who are trying to comply with the law. An employer that misclassifies workers could outbid honest and lawful employers by as much as 30 percent.

Harkin reported that in Iowa's first year of operating the Iowa misclassification program, the state uncovered 182 employers who had misclassified 1,565 workers--that totaled more than $27 million in total unreported wages, $1 million in unemployment taxes due, and unemployment penalties and interest amounting to $340,000. He claims that if state and federal agencies help to solve the problem, they can recover millions of dollars from employers who aren't paying their fair share to workers and to the individual states.

In January of this year the DOL hired more investigators to pursue employee misclassification, and the Internal Revenue Service (IRS) is also reportedly creating a nationwide employment tax auditing program, to find companies who are misclassifying employees as independent contractors.

Senator Harkin also discussed the Employee Misclassification Prevention Act, a topic our attorneys have discussed in a blog, that he introduced into the Senate this year with Senator Brown--to prevent workers from being incorrectly classified as independent contractors and give them the lawful protection and employee benefits that they have legally earned.

Contact Howard Law, PC today for help on your employee misclassification issue in Orange County, California and throughout Southern California.

U.S. Sen. Harkin: Statement at the HELP Committee Hearing "Leveling the Playing Field: Protecting Workers and Businesses Affected by Misclassification", Iowa Politics.com, June 17, 2010

U.S. Senate: HELP Committee Hearings

Related Web Resources:

California Department of Industrial Relations (DIR): The Division of Labor Standards Enforcement