“Want to avoid paying half of your employees’ Social Security tax? Reclassify them as ‘independent contractors’ so they pay it all themselves. Make them fill out a 1099. ‘That’s not a fulltime busboy, that’s Juan Co., LLC. Don’t forget to invoice us, Juan Co.’”
(John Stewart, The Daily Show, November, 2012)
As far back as 1989, a Government Accounting Office study found that 38 percent of the employers examined misclassified employees as independent contractors. As a labor lawyer for the past two decades, I’ve represented hundreds of bakery drivers who deliver and shelve bread and chips for grocery stores. In that industry, some companies use employees, some use independent contractors, and some use both, yet I have seen a steady shift away from employees. Why? By labeling workers “independent contractors,” bakeries (and grocery stores), like the Port of Los Angeles,
» Read more about: Corporate Magic: Turning Employees Into Contractors »
(This is the last in a three-part series about the misclassification of employees as independent contractors – a practice which affects millions of workers in the U.S., including most of the nation’s nearly 100,000 port truck drivers.)
An illegal practice as systemic and widespread as independent contractor misclassification suggests a collective failure of enforcement. Given the huge fiscal, human and environmental costs, what can be done to ameliorate this failure?
The problem is not that the practice is permitted under current law. On the contrary, the phenomenon is referred to as misclassification precisely because it involves the systematic violation of employee protection laws, justified by re-labeling employees as independent contractors.
Employers misclassify workers essentially because 20th century mechanisms of enforcement have not caught up with this spurious 21st century “business practice.” Lawsuits are expensive, time-consuming, risky and subject to a massive justice gap between industry and workers.
» Read more about: The Fix: Restoring the Rights of Misclassified Workers »