Employers who wrongly classify workers as “independent contractors” risk incurring hefty fines from the Department of Labor. The department does not take kindly to the practice, which leaves employees without benefits and protections, such as overtime pay, minimum wage, unemployment insurance, and family and medical leave. It also deprives Social Security, Medicare, and state unemployment insurance and workers compensation funds of revenue.
On September 15, the U.S. Department of Labor gave New Jersey an $838,621 grant to fund misclassification detection and enforcement, as part of a $10.6 million grant to 19 states.
“This is one of many actions the department is taking to help level the playing field for employers while ensuring workers receive appropriate rights and protections,” said U.S. Secretary of Labor Thomas E. Perez. “Today’s federal grant awards will enhance states’ ability to detect incidents of worker misclassification and protect the integrity of state unemployment insurance trust funds.”
The funds will be used to increase the ability of state UI tax programs to identify instances where employers improperly classify employees as independent contractors or fail to report the wages paid to workers at all. The states that were selected to receive these grants will use the funds for a variety of improvements and initiatives, including enhancing employer audit programs and conducting employer education initiatives.