An Employee by Any Other Name: The Thorny Side of Misclassification

/24-7/ -- The Hill's Congress Blog reports that there were an estimated 10 million misclassified workers in 2006, according to the Governmental Accountability Office. In a recent statement, Senator Tom Harkin cites Department of Labor statistics estimating that 30 percent of businesses misclassified employees as independent contractors. "That means the construction worker who falls and breaks his leg is denied workers' compensation, and the truck driver who works 60 hours a week doesn't receive the overtime pay his family deserves to help cover the rising costs of food and energy," says Harkin.

Employee Misclassification and the IRS

According to the IRS, determination of employee or independent contractor status requires examination of the degree of control and independence the worker is granted, with special consideration given to behavioral or financial control exerted by the hiring entity and the general type of relationship between the parties. The hiring party's classification is not definitive; for example, a trucking company may classify workers as independent contractors. However, if the company trains its drivers, owns the trucks or otherwise controls the way in which drivers complete their runs, the drivers may actually be employees, notwithstanding the employer's attempted classification.

Effects of Employee Misclassification

Misclassifying employees as independent contractors strips employees of their rights and protections, including labor protections such as minimum wage guarantees and overtime protection. Employers misclassify employees to avoid costs associated with employees, such as Social Security and Medicare payments, vacation, sick leave, pensions and, importantly, avoidance of workers' compensation costs. For example, a construction employer may attempt to classify roofers as independent contractors in order to avoid paying workers' compensation premiums and to escape liability for workplace injury or disability claims in the event an employee were to fall and get hurt.

Additionally, misclassification hurts honest employers. A representative of the Mason Contractors Association of America estimates that companies that misclassify their employees may reduce labor costs up to 30 percent. This allows dishonest employers an unfair advantage when bidding for jobs.

Senator Sherrod Brown has introduced the Employee Misclassification Prevention Act to prevent employer misconduct. In the meantime, truckers, roofers or other workers who have been injured in the course of their work should contact an experienced workers' compensation attorney. Although companies may have treated these workers as independent contractors, under other interpretations, they may actually be considered full time employees, eligible for workers' compensation benefits. An experienced attorney can advise them of their rights and protect their interests in the administrative process if they are eligible to file work comp claims.

Article provided by OhioBWCAttorney.com

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Consumer Reports Study Reinforces Need for Right to Repair Act

/PRNewswire/ -- According to the June 2010 issue of Consumer Reports, more Americans (74 percent) are very satisfied with independent repair shops for vehicle repairs than new car dealers (59 percent). To ensure that car owners can continue to choose between local repair shops and dealerships for vehicle repairs, Congress introduced the Motor Vehicle Owners' Right to Repair Act (HR 2057/S 3181).

In May 2009, Consumer Reports came out in support of the Right to Repair Act, stating that "Consumer Reports agrees, in principle, with the Right to Repair Act as it restricts its scope to 'repair' which would increase repair options for car owners."

"As evidenced by the Consumer Reports study, millions of car owners trust independent repair shops to provide affordable and competitive automotive repair service," said Kathleen Schmatz, president and CEO of the Automotive Aftermarket Industry Association (AAIA). "The top priority of the Right to Repair Act is motorist safety, ensuring that car owners know what is happening with their vehicles. To keep every motor vehicle serviced, repaired and operating safely, there must be equal access to safety alerts and repair information from the car companies."

The Right to Repair Act protects motoring consumers from a growing and potentially hazardous vehicle repair monopoly by requiring that car companies provide full access at a reasonable cost to all service information, tools and safety-related bulletins needed to repair motor vehicles, ensuring a competitive, level playing field between dealerships and independent repair shops. The legislation further provides car companies with strong protections for their trade secrets, only requiring them to make available the same diagnostic and repair information they provide their franchised dealers.

"It is important that every repair facility, whether a neighborhood repair shop or a new car dealer, has the same access to safety alerts and repair information from the manufacturers," said Ray Pohlman, president of the Coalition for Auto Repair Equality (CARE). "Supporters of Right to Repair are not seeking an unfair advantage, nor are they looking for access to the proprietary information protected by the bill. Instead, they are asking Congress to ensure that car owners, and not the car companies, decide where their vehicles are repaired."

The Right to Repair Act has bipartisan support in both chambers of Congress. The Senate version of the bill (S 3181) was recently introduced by Sens. Barbara Boxer (D-CA) and Sam Brownback (R-KS) and has 3 co-sponsors. The House version (HR 2057) was introduced by Reps. Edolphus Towns (D-NY), Anna Eshoo (D-CA) and George Miller (D-CA) and currently has 62 co-sponsors.

About Right to Repair:

The Motor Vehicle Owners' Right to Repair Act (S 3181) was introduced into the Senate by Sens. Barbara Boxer (D-CA) and Sam Brownback (R-KS). The House version of the bill (HR 2057) was introduced by Reps. Edolphus Towns (D-NY), Anna Eshoo (D-CA) and George Miller (D-CA). The Right to Repair Act protects consumers from a growing vehicle repair monopoly by requiring car companies to make the same service information and tools capabilities available to independent repair shops that they provide to their franchised dealer networks. The legislation further provides car companies with strong protections for their trade secrets. For more information about the Right to Repair Act, visit www.righttorepair.org.

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