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Employee Misclassification

For years some employers have been cheating workers by not carrying workers compensation coverage for their businesses. By misclassifying employees as contract workers not company employees they circumvent the workers compensation requirement mandated by law. North Carolina and federal officials have joined forces to go after this labor scheme and the tax cheats. The agreement between federal labor officials and the state Industrial Commission breaks down the barriers by leading a coordinated effort to find these employers.

The goal is to have workplaces with decreased misclassifications and increased compliance and worker’s receiving a fair day’s pay for their work. The misclassification of workers as contractors when they should be treated as employees is so prevalent in North Carolina that the lost tax revenue has reached millions annually.

Due to the lack of communication between the Department of Labor, Department of Revenue, Division of Employment Security and the Industrial Commission the problem employers were not held accountable for not being in compliance. This lack of oversight has made North Carolina the perfect place for companies willing to break labor and tax laws.

Workers treated as contractors have no protection of workers compensation for work related injuries or unemployment if they are laid off. By misclassifying employee’s employers cut operating costs and employers who follow the law can’t compete.

Governor McCrory has tasked the Industrial Commission to find businesses that failed to carry workers compensation insurance as required. Just recently Gerald Horne was arrested in Cumberland County for neglecting to secure workers compensation insurance in accordance with NCGS 97-94. The commission is making strides to get companies into compliance.