The misclassification of workers is a major problem in the workers' compensation market. Some legislatures, like New Jersey, have enacted laws prohibiting the misclassification of workers.
"The Legislature finds that employers in the construction industry who improperly classify employees as independent contractors deprive these workers of proper Social Security benefits and other benefits, while reducing the employers' State and federal tax withholdings and related obligations. Moreover, this practice puts businesses that bear higher costs for complying with the law at a competitive disadvantage." NJAC 12:65
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