Mislabeling of workers costs NY

Jun 11, 2007

Just last week, we mentioned that Illinois is cracking down on the misclassification of workers as "independent contractors," which costs the state millions in lost tax revenue. Now New York Governor Eliot Spitzer is doing the same. This weekend, the New York Times covered the state's efforts to get employers to correctly classify workers, and thereby pay social security, unemployment, and payroll taxes. As in Illinois, misclassification is high in the construction industry: a Cornell University study determined that 15% of such workers in New York State are misclassified. According to the Times article, "Under the state’s definition, independent contractors are not employees but are considered to be in business for themselves; employees are those hired to accomplish specific tasks as employers closely supervise their work and decide the hours, pace, place and nature of their labor." It concludes that Massachusetts takes a unique approach to this problem: there, every worker is presumed to be an employee unless the employer shows otherwise.