New York governor targets employee classification

user-gravatar Headshot

Calling the misclassification of employees as independent contractors a “growing epidemic,” New York Gov. Eliot Spitzer has formed a task force to address the issue. A recent study says 10 percent of New York workers are misclassified.

Spitzer issued an executive order Sept. 7 that created a Joint Enforcement Task Force to be led by the state Department of Labor. The task force is required to submit its first report to the governor Feb. 1.

The misclassification of workers occurs not only when an employer simply pays workers off the books, but when an employer improperly labels an individual as an independent contractor rather than an employee, Spitzer says.

“For too long state government has turned a blind eye on a growing epidemic that is keeping wages and benefits artificially low for working New Yorkers,” Spitzer says. “This executive order – a key component of my economic security agenda – protects worker rights while leveling the playing field for law-abiding employers so they are not at a competitive disadvantage to employers who refuse to play by the rules as they exploit hard-working New Yorkers.”

A Cornell University review of state Department of Labor audits determined that misclassification is most common in the construction industry but also a problem in health care, retail, hotels, restaurants and transportation.

In recent years, the business relationships between leased owner-operators and trucking fleets have come under increased scrutiny by agencies including the National Labor Relations Board and the Internal Revenue Service, often encouraged by the Teamsters union. The American Trucking Associations now publishes a newsletter devoted solely to updating its membership on attempts to reclassify owner-operators as employees.

“The Teamsters Union applauds Governor Spitzer’s commitment to protecting workers who continue to be victims of this corporate scheme to avoid responsibilities to their employees,” says Jim Hoffa, Teamsters president.