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NC Another Step Closer to Addressing Awful History of Employee Misclassification

NC Labor Commisioner, Cherie Berry

NC Labor Commisioner, Cherie Berry

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Last week, the North Carolina House gave tentative approval to the “Employee Fair Classification Act”, which would curb the widespread employee misclassification that has plagued the state.  Last autumn, a McClatchy investigation found that misclassification in the construction industry alone costs the state $467 million annually

The bill passed the House on a 93-20 vote, but another vote is needed before it can go to the Senate.  The outlook is bright, however, as the Senate unanimously passed a similar bill in April.  Both pieces of legislation call for a new division of the state labor department with the power to fine employers up to $1,000 per employee for repeated misclassification.  The Senate version of the bill deleted an exemption for newspapers, allowing them to claim their delivery workers as contractors.  The House bill retained the exemption.  

While the punishments lack teeth, they are a step in the right direction for North Carolina. The state government has had a long a long history of inaction on this issue.  The McClatchy report revealed that North Carolina labor commissioner Cherie Berry had filed only four wage theft lawsuits over five years despite the agency receiving 3694 claims in 2011 alone.  Further investigation found that Berry’s office had been cooking the workplace fatality books. In response, Republican Governor Pat McCrory gave his blessing to Rep. Gary Pendelton to sponsor the misclassification bill.   

Progress has been slow, but action has been contagious. In 2013, the state fully implemented the E-Verify system to cut back on immigrant abuse. And in the past year the state began using information sharing programs to crack down on businesses that falsify and illegally cancel workers’ compensation coverage.


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