(video) Phil Phillips: "Classification of Workers: More Incentive to Get It Right"
Friday, July 9, 2010 at 10:26AM
Classifying individuals as independent contractors or employees has always been tricky. The desire to reduce employment expenses led some employers to utilize more independent contractors rather than hiring additional employees. Now, the Obama administration has stepped in to curb what it believes to be an abuse of employers classifying workers as independent contractors rather than employees.
While the scope of the problem is hard to quantify, the U.S. Department of Labor estimates 30 percent of employers misclassify workers. President Obama's Fiscal Year 2011 budget (released on February 1, 2010) sets aside money to establish a proposal jointly administered by the Departments of Labor and Treasury to crack down on employers misclassifying individuals as employees rather than independent contractors. The goal is to recoup up to $7 billion in unpaid employment taxes over the next 10 years. The specific enforcement efforts include allocating $25 million to hire 100 more enforcement personnel. The IRS also plans to increase its audits of companies to ensure compliance with the law. Likewise, many states also have increased enforcement efforts by imposing penalties for misclassifying workers.
In this video Scott Drake interviews Foley and Lardner partner Phil Phillips...
