In a show of support for workers and law-abiding businesses, the North Carolina House passed a bill that would prevent businesses from classifying workers as independent contractors when in fact they are employees. This misclassification cheats workers from being covered by workers’ compensation laws and allows the cheating businesses to avoid paying withholding taxes. In turn, this practice puts law-abiding businesses at a distinct disadvantage in the bidding process when cheating businesses are able to underbid the work because of their lower costs.
The North Carolina Senate passed a similar law in the current session and now either the Senate will have to vote to accept the House’s version or reconcile the differences. The bill would create a team of officials to investigate and stop businesses from misclassifying workers.
The impetus for these bills was a five-part series The News & Observer published in September 2014. Misclassification, common in the construction industry, results in an estimated $467 million a year in lost state and federal tax revenue in North Carolina from the construction industry alone. In a rare instance of mutual interests, both business and labor interests have rallied around the bill to encourage the state to level the playing field for honest employers and to protect workers.
About the Author
David E. Vtipil
David Vtipil is an attorney at Younce, Vtipil, Baznik & Banks and concentrates his law practice in injuries due to negligence and workers' comp. David E. Vtipil was selected by his peers for inclusion in the 21st Edition of The Best Lawyers in America in the field of Workers’ Compensation Law.
