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Building Trades Leaders: VA’s Misclassification Task Force Not Given the Muscle to Affect Real Change

VA Gov. McAuliffe struck early on the issue, but may need to strike again

VA Gov. McAuliffe struck early on the issue, but may need to strike again

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A recent report on the Virginian-Pilot Online looks into the state’s misclassification problem and how recent efforts to curb the practice have not been enough to put a dent into its negative effects

Last year, Governor Terry McAuliffe signed an executive order creating a task force on misclassification and payroll fraud.  The state has since begun to add information on agency websites about misclassification and increased communication between the Department of Taxation and the Employment Commission.  It has also begun to send employers notices on misclassification in quarterly billing statements for unemployment taxes.  However, it has yet to enable its agencies to levy fines or penalties.

Maurice Jones, the Virginia Secretary of Commerce and Trade, told the Virginian-Pilot that state officials will decide by October if new measures that would need to be funded by the General Assembly are needed

“The questions we will be asking include: Do we need to enhance our audit staff?,” Jones said. “Will we need to enhance our ability to impose penalties for noncompliance?”

Virginia has fallen in line with the national trend of rampant employee misclassification since the economic crisis (and prior, frankly).  In 2010, the Commonwealth audited 2,120 employers, roughly 1 percent of the 188,585 operating in the state.  The audit found that nearly 28 percent, or 584, had misclassified workers.  That number is higher than the current national average.  A June report from the Economic Policy Institute (EPI) estimated that between 10 and 20 percent of workers are misclassified nationally.  

Virginia labor leaders are calling for action since the current system is unable to handle the amount of misclassification occurring in the state. Many think that those currently working on cases are unable or unwilling to effectively remedy the situation.  Mike Kerr, the business development and recruitment representative for Virginia Pipe Trades Association Local 110, explained the lack of urgency:

“They just didn’t want to bother with you. It got to the point where you didn’t want to call them. It was a waste of time.”

While the state has focused on educating businesses, many wish to see Virginia increase penalties and increase investigative staff.  Jeffrey Rowe, business manager of the International Brotherhood of Electrical Workers’ Local 1340 in Newport News, agreed:

“They should absolutely be doing that.  Protecting workers should be a priority of the state. Being friendly to worker families is just as important as being friendly to business.”

Read the Virginian-Pilot piece in its entirety here.


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