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Employee Misclassification Costing New York Millions

The Senate Labor Committee is going after businesses that misclassify their employees to avoid paying fringe benefits and payroll taxes.  Instead they pay these workers cash under the table or call them independent contractors.  This practice prevents these employees from receiving benefits such as workers' compensation and health care and costs the state millions of dollars.

Robert E. Beloten, chair of the New York State Workers' Compensation Board, pointed out that it is difficult to indentify when a businesses is not playing fairly by misrepresenting their employees. "Misclassification has been habitually hard to identify," he said, because there are no requirements in the state for filing reports on independent contractors with either the Tax or Labor departments, or with the Workers' Compensation Board.

A task force on employee classification has been able to recover more than $389 million in unreported wages, as well as $11 million in unreported insurance taxes through the work of enforcement and data sharing between agencies involved in looking into this matter.