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The United States Department of Labor and the Internal Revenue Service yesterday signed Memorandums of Understanding with seven states to increase compliance with laws governing how workers should be classified and paid. Massachusetts and Connecticut were among the states participating. The efforts will focus on both education of employees and increased efficiency of enforcement through information-sharing between state and federal agencies, according to a DOL press release.
Wage theft and the misclassification of workers at so-called independent contractors has been a growing problem in the construction industry and others. Employers use the tactic to avoid proper payment of payroll taxes, unemployment and workers' compensation insurance. The practice is particularly troubling in the construction industry, where companies that play by the rules are put at a significant advantage during competitive bidding.
The effort expands the model used in numerous states, including five of the six New England states, where multiple agencies work together on a task force to ensure violations of some laws aren't allowed to pass because they do not fall under the jurisdiction of the agency that happens to be investigating.
Resources on the issue of misclassification and wage theft:
Wage theft stories on NERCCBlog.
1099 and Misclassification stories on NERCCBlog.
National comprehensive resource page.