News
Date:November 17, 2015
Contact:Public Affairs @ (225) 342-3035

LWC focus on misclassification of workers yielding record results

BATON ROUGE – The Louisiana Workforce Commission is on track toward a second consecutive record-setting year in the identification of workers misclassified by employers as independent contractors.

Through November 12, 2015, LWC identified nearly 9,400 misclassified employees in audits of 865 companies. Audits in process through the end of 2015 are expected to surpass 2014’s record discovery of 12,782 misclassified employees.

Misclassifying employees as independent contractors can lead to companies not paying unemployment taxes, workers’ compensation premiums and their portion of Social Security and Medicare taxes. They may also gain an unfair competitive advantage over competitors by improperly lowering their labor costs.

LWC Executive Director Curt Eysink said stepped-up efforts by LWC auditors have identified about $83 million in under-reported wages to date in 2015, resulting in the collection of more than $923,000 in unemployment insurance taxes owed by employers.

“We’ve ramped up our efforts in recent years thanks to new laws such as Louisiana’s Fair Play Act of 2012 and cooperation with state and federal agencies that are sharing data on companies. We want to provide a level playing field for companies that are following the law and are providing the benefits they are required to offer their employees,” he said.

Louisiana led the nation in 2014 by finding 11 misclassified workers per audit. Until 2010, the federal government required that unemployment insurance audits be done randomly. That year, fewer than 300 misclassified employees were identified in Louisiana. Today, LWC’s audits are risk-based, using tips, complaints, information from partner agencies and also focus on industries, such as construction, hospitality and personal services, in which worker misclassification has been prevalent. Eysink said the cooperative agreements with other agencies and technological advances have also made the audit process more effective, ensuring more companies are compliant with the law.

There are more than 100,000 employers in Louisiana’s growing economy and it’s not possible to audit all of them every year. To be effective, the agency relies on information from the public when misclassification is suspected.

“While our auditing process has become more effective, we also investigate when workers file complaints or when we receive tips by phone or at our website, www.laworks.net,” Eysink said. “We want people to tell us when they think a company is acting inappropriately. We’ll investigate and bring the company into compliance if necessary,” he said.

An audit is not the only method LWC uses to determine whether a worker has been misclassified. A worker’s status as an employee or an independent contractor is determined as part of the process when a claim for unemployment insurance benefits is filed.

After the employer is notified of the LWC’s determination, the employer must correct classifications and pay unemployment taxes that are due, including possible interests and penalties on back-taxes due. An employer found to be misclassifying workers may appeal the finding to an administrative law judge.

Eysink said, “many misclassification cases are a result of employer error due to confusion about whether a worker is legally considered an employee or an independent contractor. The LWC can offer guidance.”

Employers who are unsure whether they should classify their workers as employees or independent contractors can access information online at www.laworks.net. Employers also can speak to a tax agent for additional information about properly classifying workers by calling the LWC employer call center at 225-326-6999.

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