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Aug
2012
28

LEAVING HER MARK: NC Gov Issues Executive Order to Combat Employee Misclassification



North Carolina Governor Bev Perdue may be overseeing the most anti-union, “Right-to-Work” state in the nation, but that didn’t stop her from issuing Executive Order 125 last week, thus creating a task force to combat the state’s problem with employee misclassification. The action came on the heels of a series of articles by the Raleigh News & Observer that brought the issue to light with in-depth reporting on how misclassification hurts North Carolina’s workers and its economy.

From the Governor’s press release announcing the EO:

“We must make sure that all facets of state government work together cooperatively,” Gov. Perdue said. “I am expecting this task force to cut through any red tape and make any recommendations needed to protect workers,” 

The Task Force will strive to: (a) protect the health, safety and benefits of workers; (b) eliminate any competitive advantage currently enjoyed by businesses who violate the law; and (c) educate employers and employees regarding applicable legal requirements relevant to the practice of employee misclassification. The Task Force will include heads of various state agencies or their designees and representatives of other entities possessing expertise on these issues.

The task force is a beginning, but Perdue will be out of office by the end of the year. Luckily, both men running to replace her, Republican Pat McCrory and Democrat Walter Dalton, told the News & Observer that the issue is a top priority.

Employee misclassification not only unjustly shifts burden to workers while robbing the state of valuable tax revenue, it also gives businesses that skirt the law an unfair advantage against those who follow it.

The taskforce seeks to enhance communications among state agencies to better identify the factors that allow businesses get away with unscrupulous behavior. According to WorkersCompensation.com:

“We must make sure that all facets of state government work together cooperatively,” Gov. Perdue said. “I am expecting this task force to cut through any red tape and make any recommendations needed to protect workers,”

The Task Force will strive to: (a) protect the health, safety and benefits of workers; (b) eliminate any competitive advantage currently enjoyed by businesses who violate the law; and (c) educate employers and employees regarding applicable legal requirements relevant to the practice of employee misclassification.

A legislative study commission formed this summer has also called for changes in how the state combats worker misclassification. A lack of leadership and direction among state agencies was found to be a central flaw that enabled abuse:

Phil Berger, Senate president and an Eden Republican, said he’d be looking to the state controller to make recommendations on how agencies can better share their data and detect fraud. A report is due in October.
This summer, legislators formed a study commission after The N&O reported that at least 30,000 businesses were failing to buy required workers’ compensation insurance. That group will soon start meeting, and Berger said it could look at the larger issues as well.

“There seems to be a failure of the regulatory agencies to curb the inappropriate activity,” Berger said. “This can’t go on.”

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