STATEMENT: Gov. McCrory’s action on worker misclassification fraud is a step forward

A STATEMENT FROM THE NC JUSTICE CENTER

RALEIGH (December 19, 2015) — We applaud Gov. Pat McCrory for addressing the growing problem of employer misclassification fraud today. By issuing Executive Order No. 83 – the “Employee and Employer Fairness Initiative” – the Governor has taken an important step for workers.

Misclassification fraud harms workers, puts a strain on government resources, and provides an unfair advantage when unscrupulous employers compete with law-abiding businesses. The practice occurs when an employer incorrectly pays a worker as an independent contractor rather than an employee. Misclassification fraud gets employers off the hook for basic protections, including minimum wage, overtime pay, worker’s compensation, health and safety protections, unemployment insurance, family medical leave, protections against discrimination, and Social Security benefits. Employers who fraudulently misclassify their workers have an unfair advantage when bidding for contracts. Hundreds of millions of dollars in state and federal taxes are lost each year in NC from misclassification fraud.

The Governor’s Executive Order is a step in the right direction toward real enforcement of our labor laws. Serious enforcement must change the current model, where cheaters do not think they will ever be caught — and if they are, little to nothing will happen to them.

FOR MORE INFORMATION, CONTACT: Allan Freyer, Director, Workers’ Rights Project, allan@ncjustice.org, 919.856.2151; Bill Rowe, General Counsel & Director of Advocacy, bill@ncjustice.org, 919.856.2177.