CLIENT UPDATE

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September 12, 2007

New York State Creates Task Force To Identify Misclassified Independent Contractors

On September 10, 2007, New York Governor Eliot Spitzer signed an Executive Order creating an interagency task force to coordinate efforts by state agencies against employers who wrongly classify employees as independent contractors.

The Executive Order was signed due to the state's belief that employers often mischaracterize their employees as independent contractors to avoid paying workers' compensation premiums, unemployment insurance, Social Security taxes and overtime premiums.According to state officials, employers who mischaracterize employees put those that follow the regulations at a competitive disadvantage.

The task force should lead to greater cooperation between agencies in sharing information regarding employee misclassification.Thus, if one agency, such as the tax department, finds that a company is misclassifying its employees, it will now share this information with other agencies, such as the Workers' Compensation Board.The task force should also lead to increased enforcement of already existing laws against employee misclassification, with a focus on those industries, such as construction, where misclassification is prevalent.Employers are advised to review classification of those who perform work for the company, independent contractors and employees, to assure that no employees are wrongly classified.

If you have any questions regarding this issue, please feel free to contact us.