.LAST month, a Michigan construction worker named Matt Anderson testified in a Senate hearing about being a victim of employee misclassification. Mr. Anderson said that his employer forced him, after six years as an employee, to switch to “independent contractor” status. Though the move stripped Mr. Anderson of basic employee rights and protections, he went along with the change, he said, because “my fellow workers and I had families to support and we saw how bad the economy was.”
Today, millions of American workers in a wide variety of sectors, from construction and trucking to I.T. and professional services, are victims of misclassification, a tactic employers use to avoid paying taxes and providing benefits that are guaranteed to employees, such as workers’ compensation, overtime pay, minimum wage and unemployment insurance.
In 2000, a United States Department of Labor study estimated that up to 30 percent of employers misclassify workers. This year, the Treasury Department’s inspector general concluded that the problem had worsened. Fifteen states have now teamed up with the Department of Labor and the Internal Revenue Service to reduce misclassification through information sharing and joint...
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