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State Auditor: VT Misclassification Task Force Has Met TWICE Since 2012



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In Vermont, a scathing new report from State Auditor Doug Hoffer shows that state agencies are not doing enough to fight employee misclassification despite legislation and task forces aimed at combatting the problem. 

The report reveals that state laws are not being properly enforced, subcontractors are not being vetted to ensure they have workers’ compensation insurance, and cases are not being resolved. The misclassification task force started in 2012 to help coordinate efforts across multiple agencies met only twice through July of 2015.  The audit shows an understaffed and overwhelmed Department of Labor (DOL) whose job is made more difficult by faulty language in misclassification legislation.  

Companies attempting to gain a competitive advantage on the backs of workers? That’s par for the unscrupulous course. Yet in Vermont the problem is exacerbated by the fact that the DOL does not issue penalties for misclassification.  In 2014, potential misclassification penalties in the state totaled $260,000, according to Hoffer.  But the “statutes in a 2010 law were vague and did not define an appeals process for employers hit with fines relating to unemployment insurance,” according to DOL Commissioner Annie Noonan. Hoffer notes that Noonan’s department has had five years to work with the Legislative Committee on Administrative Rules to write new regulations.

VTDigger writer Morgan True analyzed the report and discovered troubling case work issues:

Records from DOL’s Workers Compensation Division show 30 investigations dating back to 2011 are incomplete, and another 134 cases listed as active are assigned to investigators who no longer work for DOL. The division’s database showed 73 cases assigned to a single investigator, according to the report.

Some of the cases classified as active were held open in case a business that closed reopened under another name, while others were complete but the necessary paperwork was never filed to officially close the case, Noonan said.

The Workers’ Compensation Division’s investigative unit has been constrained by illnesses, injury and turnover, she said. Two people in the five-person unit missed extended periods for medical leave, and one died recently, Noonan said. One employee did not make it past their probationary period, and a temporary worker left for a permanent position elsewhere. Another member of the unit missed time due to a work-related injury, she said.

During the period covered by the audit, 2011 to 2015, the unit was essentially staffed by one investigator and one supervisor, according to Noonan. Recently, DOL was able to fill all the positions in the investigations unit.

The Employee Misclassification Taskforce created by Governor Shumlin’s 2012 executive order has failed to do what other taskforces aligned with the DOL have done in other states. Massachusetts expanded its program in 2014 to great avail.  That year, Massachusetts recovered more than $20 million in restitutions, taxes, and penalties. 

Beginning next year Vermont will utilize new forms that disclose subcontractor workers’ compensation information and violation history.  In July of 2016 the agency will begin auditing the forms.  Deputy Transportation Secretary Chris Cole told VTDigger that his agency will implement Hoffer’s audit recommendations:

“We take the audit report very seriously and it is critical that workers get classified appropriately both for our projects and those of BGS.  We’re going to work diligently to make sure those recommendations are implemented.


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