For years in North Carolina, businesses – primarily those in the construction industry – have sidestepped labor and tax laws by labeling employees as “independent contractors.”
In so doing, they reaped numerous benefits. They have been able to underbid law-abiding companies by as much as 20 percent because they didn’t withhold taxes from paychecks. Workers, meanwhile, are made to toil absent the benefit of protections to which they are entitled, such as unemployment and workers’ compensation insurance.
The News & Observer and The Charlotte Observer conducted a five-part series last year detailing this practice, and revealed it costs an estimated $467 million annually in lost federal and state revenue – just from the state’s construction industry alone.
Now, lawmakers are taking action against this practice. A proposed by Rep. Gary Pendleton (R-Wake County), has introduced a measure that would create a special enforcement team to crack down on businesses that profit from misclassification, especially within the construction sector.
The idea is not only to protect workers, but also other businesses that are at a disadvantage because they abide by teh law.
It’s called the Employee Fair Classification Act, HB 482. It recently passed 93-20 on its second reading, and it’s expected to receive House approval. From there, it will be sent to the state Senate, with a request to adopt the version drafted by the house.
The Senate passed its own similar bill unanimously earlier this year. So now the question is will it agree to adopt the House version, and the various changes in it, or will there be negotiation between the two legislative bodies.
Interestingly, the measure has backing from the business community, including the state builders’ association and the state business chamber, which support the measure alongside justice advocates.
While politicians often find themselves weighing measures that pit workers’ rights and benefits against those of businesses, here, both sides are basically on the same page. The bill works to essentially enforce the laws that are already in place and protect workers who end up working for employers that don’t treat them fairly.
Still, there are a few who oppose. For example, one Republican lawmaker out of Gaston County argued against the measure as a means for competitors to “tattle” on each other.
But those voices of opposition appear to be the minority.
By-and-large, most workers are in fact employees. There are some noted exceptions.
For example, newspapers received a special exemption that allows delivery carriers to be treated as independent contractors for workers’ compensation purposes. In the House version of the new bill, this exemption would stand; in the Senate version, it would be stricken.
Meanwhile, FedEx is in the process of seeking an exemption for its carriers, who have long been classified in other states as independent contractors. However, a House committee has blocked that exemption. Some lawmakers want to see that changed too.
But the idea is that companies need to provide these protections to workers because otherwise, a work-related injury places an undue burden not only on the worker, but the rest of society.
If you have been injured at work, contact the Lee Law Offices at 800-887-1965.
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