Employee Misclassification Initiative
Defining the working relationship between “employees” and “independent contractors” is one of the most troublesome and important issues facing businesses today. And while this distinction is complicated, it is a crucial matter. Classifying workers as independent contractors allows companies to avoid paying minimum wage, overtime, Social Security and Medicare taxes, unemployment insurance taxes, workers’ compensation premiums, and circumvent federal antidiscrimination laws. Consequently, misclassification denies workers of rightful protections and privileges under state and federal law. Meanwhile, avoiding the payment of certain taxes and wages gives employers a competitive advantage and thus, an economic incentive to misclassify. Such forces could lead to what has been coined in the wage-and-hour context as a “regulatory race to the bottom.” Lastly, misclassification also causes federal, state and local governments to suffer revenue losses as employers circumvent their tax obligations.
(Many thanks to CLS student Timothy Kim '17 for his work in creating this webpage).