States Going After Employers Who Misclassify Workers as Independent Contractors

States from New York to California are taking steps to crack down on employers who improperly classify their workers or fail to declare their income.

When construction slowed during the recession, some companies hired workers and wrongly designated them as independent contractors to avoid paying insurance, taxes, fair wages and overtime.

Danny Odom, chief operating officer of Odom Construction Systems, Inc. in Knoxville, Tennessee, says he wouldn’t even though the decision put the company of about 225 employees at a disadvantage as the practice would shave about 30 percent off his labor costs. He testified in support of legislation that went into effect July 1 allowing the state to fine competitors who misclassify employees.

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