New York Joins New Jersey and Kansas in Targeting Misclassified Independent Contractors

New York Labor Commissioner M. Patricia Smith announced June 8, 2007, that she and Governor Eliot Spitzer are developing a plan to increase enforcement efforts aimed at companies that “illegally misclassify workers as independent contractors.”

She indicated that the enforcement efforts are intended to eliminate the “law-breaking” practice of companies misclassifying workers as independent contractors in order to avoid federal employment taxes, state unemployment taxes and workers’-compensation premiums and deny workers the right to union representation.

While Commissioner Smith and the Governor are still developing the enforcement plan, the Commissioner stated that the construction industry will be the initial target and a likely component of the new strategy will be an increased emphasis on information sharing among the state’s Labor Department, Workers’ Compensation Board and Department of Taxation.

While the details of the plan have yet to be revealed by Smith and Spitzer, precedents in New Jersey and Kansas demonstrate that such efforts often go far beyond enforcement against illegal misclassification, sweeping up many legitimate independent contractors in a broad government net and forcing entrepreneurs out of business.

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