Workers Comp Zone


In November 2011 California reached a memorandum of understanding with the U.S. Department of Labor on the issue of employee misclassification.

According to the U.S Department of Labor:
“The Department’s Misclassification Initiative, launched under the auspices of Vice President Biden’s Middle Class Task Force, is making great strides in combating this pervasive issue and to restoring these rights to those denied them. In September 2011, Secretary of Labor Hilda L. Solis announced a major step forward with the signing of a Memorandum of Understanding (MOU) between the Department and the Internal Revenue Service (IRS). Under this agreement, the agencies will work together and share information to reduce the incidence of misclassification of employees, to help reduce the tax gap, and to improve compliance with federal labor laws.”
“Additionally, labor commissioners and other agency leaders representing twelve states have signed MOUs with the Department’s Wage and Hour Division, and in some cases, with its Employee Benefits Security Administration (EBSA), Occupational Safety and Health Administration (OSHA), Office of Federal Contract Compliance Programs (OFCCP), and the Office of the Solicitor. (See interactive map of participating states). The Department is actively pursuing MOUs with additional states as well.
These MOUs will enable the Department to share information and to coordinate enforcement efforts with participating states in order to level the playing field for law-abiding employers and to ensure that employees receive the protections to which they are entitled under federal and state law. Employers that misclassify their employees may not be paying the proper overtime compensation, FICA and Unemployment Insurances taxes, or workers’ compensation premiums.”

I’ve written many posts about the problem of misclassification and how the problem plagues our comp system. Honest employers are forced to compete against cheating employers who misclassify employees, often skirting workers’ comp coverage.

So it’s worth posting a link to the MOU between California and the Department of Labor that deals with this issue:

Christine Baker of the DIR has noted in several speeches that dealing with employee misclassification will be an important feature of the Brown Administration’s labor policy. The MOU appears to further cooperation between federal and state agencies in dealing with the problem.

Thumbs up.

Julius Young

Category: Political developments