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News | Jan 01, 2011

Exploring the Scope of the “Independent Contractor” Rip-Off

When the Boss misclassifies a worker as an “independent contractor” (“IC”), he does so at the expense of the worker, the worker’s family, American taxpayers, and competing companies.  Here’s how:

  • Workers’ Compensation Benefits:  The IC classification enables the Boss to avoid paying for workers’ compensation insurance.  This is all “well and good” until a work injury devastates the worker’s family and reaps havoc on our health care system.
  • Overtime Pay:  As already discussed, the IC classification enables the Boss to avoid paying time-and-one-half overtime pay FLSA.  As such, IC abuse circumvents the FLSA’s policy of reducing unemployment by creating a financial disincentive against overtime work.  Meanwhile, the Boss obtains a competitive advantage over law-abiding competitors.
  • Family Medical Leave:  ICs are not covered by the Family and Medical Leave Act (“FMLA”), which allows an employee up to 12 weeks of unpaid leave to care for herself or an ailing family member.
  • Unemployment Benefits:  ICs are not entitled to unemployment benefits.  Thus, by misclassifying employees as ICs, the Boss avoids unemployment insurance payments at the clear expense of working families.
  • The Right to Unionize:  The National Labor Relations Act (“NLRA”) gives employees the right to join a union without risk of retaliation.  But IC’s have no such protection, and companies that misclassify employees as ICs gain an unfair advantage over their law-abiding competitors.
  • Protection from Unlawful Discrimination:   IC’s are not covered by our Nation’s most fundamental anti-discrimination laws, such as Title VII of the Civil Rights Act, the Americans with Disabilities Act, and the Age Discrimination in Employment Act.  What a great tragedy for misclassified ICs and what an affront to our core principles.
  • Employer Health and Welfare Benefits:  Many companies provide employees with fringe benefits like pension plans and health insurance.  But ERISA, the federal law overseeing employee benefit plans, does not apply to ICs, and, as such, companies routinely deny health and retirement benefits to ICs.
  • Social Security and Medicare Payments:  The IC classification enables the Boss to circumvent FICA withholdings and, most significantly, the employer’s share of these basic social welfare programs.

In view of the above, IC abuse is nothing short of tragic for the American worker and for us as a society.  How can we allow millions of American families to be improperly and unnecessarily denied our Nation’s most basic workplace rights?

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