NEW YORK 2009 Report of the Joint Misclassification Enforcement Task Force
Totals from inception in September 2007 through December 2009:
• 31,500+ instances of employee misclassification.
• 65 multi-agency enforcement sweeps; 15,600+ misclassified employees found.
• 2,413 individual investigations; 15,891 misclassified employees found.
• $389.6 million in unreported taxable wages.
• $11 million unemployment insurance taxes recouped.
• $1.3 million in UI fraud penalties.
• $1.5 million in Workers Comp fines and penalties.
• $14.5 million unpaid wages owed to workers.
• 300+ investigators from partner agencies attended two-day cross-training in 2009.
ONTARIO
Estimates of the Size of the Underground Economy in Ontario’s Construction Industry
• Study Puts 2007-2009 Provincial and Federal Revenue Loss at $1.4 - 2.4 Billion;
• Misclassification of "Independent Operators" is Basis of 80% of Underground Economy
U.S. DOL, U.S. SENATE Statement of Seth D. Harris, Deputy Secretary U.S. Department of Labor Before the
Committee on Health, Education, Labor, and Pensions U.S. Senate, June 17, 2010 NEW YORK, U.S. SENATE Testimony of Colleen C. Gardner, Commissioner of the New York State Department of Labor
Before the U.S. Senate Committee on Health, Education, Labor and Pensions, June 17, 2010
"Leveling the Playing Field: Protecting Workers and Businesses affected by Misclassification”
IOWA Summary of Misclassification Investigations & Penalties Due, July 09 - June 2010 TENNESSEE
Misclassified Construction Employees in Tennessee
Audit of 2006 data yields estimate of between 21,990 and 38,680 misclassified or unreported Tennessee
construction workers--from 11 to 22 percent of all workers in the industry.
ESTIMATED LOSSES (2006 only):
• Unpaid Unemployent Insurance Premiums: $8,418,872 - $14,927,321
• Unpaid Workers Comp Premiums: $52,099,310 - $91,632,920
• Unpaid Federal Income Tax: $15,225,452 - $73,414,752
• Unpaid Social Security/Medicaid: $7,786,768 to $42,058,044
NEW YORK Cornell University Issues Presentation on Research in Employer Payroll Fraud
• Costs and Extent of Misclassification and Other Violations
• Summary of Key State Laws and Actions to Date
U.S. GENERAL ACCOUNTABILITY OFFICE Study Says Misclassification a 'Serious Problem'
• Annual Taxpayer Losses Exceed $1.6 Billion
• DOL, IRS, and OSHA Agree to Report's Recommendations for Greater Interagency Cooperation and Increased Enforcement of Tax and Wage-and-Hour Laws
• UBC Summary of GAO Report w/ Link to Full Report (click here)
MICHIGAN Social and Economic Cost of Misclassification in Construction Industry
• 30% of Michigan employers misclassify employees or underreport payroll.
• 20% of the workers of employers who misclassify are either erroneously labeled self-employed or receive unreported payments.
• In all, 8% of ALL Michigan construction workers are misclassified or receive payments that are not reported by their employers.
• Some $1.5 billion in annual payroll not reported to Unemployment Insurance Agency.
• Cost to UI trust fund is $17 million each year.
• Projections see an additional $20 to $33 million in state income tax lost every year.
FLORIDA Regulators' Report Cites WC Reforms, Fraud Fight in Reduced Premiums
• Contractors' rates down 52% since 2003 reform/enforcement law. (Pg. 25)
• "Two primary reasons for the continued rate reductions: [lower claims costs and] the continued crackdown on companies fraudulently avoiding payment for workers’ compensation insurance." (Pg. 25)
TEXAS
Austin Study Finds 38% in Construction Misclassified; Cost Tops $8.6M
• 38% of Austin construction workers were misclassified as independent contractors.
• At least $8,618,869 in federal taxes and state unemployment taxes will be lost this year due to misclassification of Austin construction workers in vertical construction, just one sector of the industry.
• The Texas Workforce Commission’s 2008 audit of selected companies revealed that the construction industry had more misclassified workers and lost tax dollars than any other industry in Texas.
U.S. TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION
[summary; link to full report below]
Study Cites Billions in Taxes Lost to Misclassification, Calls for IRS-Wide Coordination to Increase Compliance & Full Research on Current Losses
• "In their response to the report, IRS officials agreed with the recommendations... The IRS has already begun addressing both [coordination and research] issues."
• "Misclassified workers are a significant portion of the employment tax gap."
• "Preliminary analysis of Fiscal Year 2006 operational and program data found that underreporting attributable to misclassified workers is likely to be markedly higher than the $1.6 billion estimate from1984" [last full study].
U.S. Treasury IG for Tax Admin [full report]
While Actions Have Been Taken to Address Worker Misclassification, an Agency-Wide Employment Tax Program and Better Data Are Needed" (Ref. Number: 2009-30-035)
OHIO
Report of the Ohio Attorney General on the Economic Impact of Misclassified Workers for State and Local Governments in Ohio
• "The conclusion we reach is that worker misclassification very likely imposes direct costs to state and local governments in Ohio costing hundreds of millions of dollars in lost revenues annually to state and federal government." [From the Executive Summary]"
FLORIDA: GRAND JURY REPORT
Worker Comp Fraud via Check-Cashing Firms (excerpt)
WASHINGTON DC
Enforcing Change: Five Strategies for the Obama Administration to Enforce Workers’ Rights at the Department of Labor
Center for American Progress Action Fund, American Worker Project
MASSACHUSETTS
Social and Economic Costs of Misclassification in Construction (Harvard)
CALIFORNIA
Workers Comp Fraud--Extent and Impacts on Honest Emplyers (UC Berkeley)
CONNECTICUT
Cost to Connecticut of Employee Misclassification 1992
WASHINGTON
Unregistered Firms Evaded $274M in 2004 Taxes and Workers Comp (Joint Agency Report)
NEW YORK CITY
Taxpayer Impact of Underground Economy in NYC Construction (Fiscal Policy Institute, 12-07)
MINNESOTA
Misclassification of Employees as Independent Contractors (Office of Legislative Auditor, 11-07)
Planmatics Study for USDOL on Unemployment Insurance GAO Study on Reducing Tax Gap 2005 NEW YORK STATE
How Big is the Workers Compensation Shortfall? (Fiscal Policy Institute)
GAO
Employment Arrangements--Improved Outreach Could Help Insure Proper Classification
BEAR STERNS
Underground Labor Force is Rising to the Surface
NEW YORK STATE
The Cost of Worker Misclassification in New York State (Cornell)
NEW YORK CITY
The Underground Economy in New York City's Affordable Housing Industry (Fiscal Policy Institute)
MAINE
Economic Costs of Misclassification in Construction
Coopers-Lybrand
Projected Loss of Federal Revenue Due to Misclassification
FLORIDA
Part I Loss of Florida Workers Comp. Premiums in 1997
FLORIDA
Part II Loss of Florida Workers Comp. Premiums in 1997
GAO
1996 Testimony on Misclassification
ILLINOIS
Economic Costs of Employee Misclassification in Illinois
CANADA
Attacking the Underground Economy in Ontario
CANADA
Estimated Revenue Losses due to Underground Practices in Ontario
CANADA
Underground Economy Bad for Construction Industry, Bad for Government, Too