THE MISCLASSIFICATION OF INDEPENDENT CONTRACTORS: THE FIFTY-FOUR BILLION DOLLAR PROBLEM

Employers are required to categorize their workers as either employees or independent contractors. On average, most independent contractors are properly classified, but the problem is that many employers misclassify their workers in order to save on labor costs and avoid liability under various employment Acts. A disheartening story told during a committee hearing involved a dishwasher at a family-style restaurant who was being paid less than minimum wage and did not receive overtime. When the dishwasher confronted his employer about the situation, he was told that he would be paid for all the overtime wages and back pay he was owed. A few days later, the dishwasher was approached by the employer’s attorney who said the employer would only pay a fraction of the back wages, and if he made trouble for the employer, trouble would be made for the dishwasher. After filing a wage complaint with the state, the dishwasher was fired, and the employer argued that overtime was not owed because he was an independent contractor. Here, it was evident that the dishwasher was being misclassified to simply save on labor costs. Furthermore, the dishwasher was being illegally deprived of minimum wage, overtime pay, and even worker’s compensation coverage. View More