Raleigh, N.C. Governor Pat McCrory announced a new agreement signed today between the North Carolina Industrial Commission and the Wage and Hour Division of the United States Department of Labor (USDOL) that focuses on protecting the rights of workers and lawful businesses by correctly classifying workers as employees rather than independent contractors. This agreement builds on the progress of Executive Order 83, which Governor McCrory issued in December 2015 and is aimed at preventing and combating the abuses associated with employee misclassification.
"Hard-working employees deserve to have their rights protected for their time, energy and talents,"
said Governor McCrory. "Today's agreement will increase our ability to safeguard workers' rights and protections, while also providing a level playing field for businesses who are following the rules."
Under the agreement announced today, the state and federal governments will now collaborate in closer fashion on both compliance investigations, as well as outreach and education programs that aim to reduce worker misclassification.
According to the governor's executive order, certain businesses engage in employee misclassification by improperly classifying their employees as independent contractors, which enables these businesses to avoid the liabilities and obligations imposed by state and federal law. Employee misclassification deprives state employees of their lawful rights and protections, affords unethical business owners with a competitive advantage at the expanse of lawful businesses and divests the state and the public significant tax revenues.
The new three-year Memorandum of Understanding agreement with the U.S. Department of Labor will help the state meet several objectives:
"The Industrial Commission is excited about this agreement with the U.S. Department of Labor to share information critical to identifying potential employee misclassification,"
- Reduce worker misclassification
- Increase compliance with state employment and unemployment tax requirements
- Increase compliance with federal labor laws enforced by the USDOL, including wage payment laws
- Reduce abusive employment/unemployment schemes
- Reduce questionable employment tax and worker's compensation practices
- Create educational and outreach materials offering guidance for employers and workers
said Charlton L. Allen, Chairman of the N.C. Industrial Commission. "We are looking forward to this collaboration, as it will assist us in achieving our strategic goals."
More information about employee misclassification and related issues can be found here
- Contact: Crystal Feldman