http://www.labornotes.org/2010/03/when%E2%80%99s-worker-contractor-when-boss-wants-cheat Enku Ide | April 5, 2010
Everyone wants to “be his own boss,” right? That’s the American dream, we’re told. But when a real boss tells a worker she’s not an employee but an independent contractor—it’s simply a way to steal wages and cheat on taxes.
Worker centers in many states are seeking state and national legislation to strike back at such thieving bosses. And some lawmakers, with budgets strapped by the recession, are keen to find ways to haul in tax-shirking employers.
Worker centers, like Chicago's Arise, are striking back at employers who cheat employees by labeling them "independent contractors," and are finding support from lawmakers keen to haul in tax-shirking employers. Photo: Arise.
Mislabeled workers “suffer the worst of both worlds” according to the worker-rights advocacy group American Rights at Work. Not only do they lack control over their work, they are denied legal protections due to workers, including unemployment insurance, overtime pay, anti-discrimination laws, minimum wage requirements, and workers’ compensation.
The Department of Labor investigated nine states in 2000 and found that up to 30 percent of employees were misclassified, with about 3.4 million illegally called contractors. One study found this practice cost the federal government as much as $34.7 billion in taxes between 1996 and 2004.
Dozens of states are taking notice, too. In New York—where an estimated 10 percent of private sector employees are labeled contractors—state attorneys found that employers used the ruse to steal more than $12 million from workers in 2007. Ohio estimates a loss of $361 million per year from unpaid taxes and workers’ comp premiums.
In Austin, Texas, where up to 38 percent of construction workers are wrongly classified, the scam has cost the state more than $8 million in taxes and unemployment contributions, according to a study published last June by the Workers Defense Project.
FULL story at link.