February 14, 2010 | Posted By Diane Pfadenhauer | print this article

Like NY, the Federal Government Now Targeting Employers Who Hire Independent Contractors

For those of us in New York State, we have been experiencing an increase in scrutiny by the state concerning the misclassification of employees as independent contractors.  Now the federal government has gotten into the game and made this issue part of its federal budget.  Here are few things that are about to happen:

  1. A $20 million raise for the Department of Labor (DOL) - from about $220 million to $240 million. The focus of this money will be to training investigators on misclassification issues.
  2. The budget proposal for 2011 includes a $25 million initiative between the DOL and the Treasury Department with a goal of eliminating or reducing opportunities under current law for employers to misclassify workers. It includes hiring 100 new enforcement personnel to target worker misclassification. 
  3. Lastly, new legislation under the Taxpayer Responsibility, Accountability and Consistency Act (2009) would make it more difficult for for employers to classify workers as independent contractors for employment tax purposes. It would increase employer penalties.

So for those employers who think that some of their workers are independent contractors, think again.  They probably aren't and the stakes associated with misclassification are only getting higher.

Thanks to fellow Lexbloggers at the Hunton & Williams law firm for bringing this to our attention.