Funding Stripped for Worker Misclassification Program

In a victory for your Home Builders Association and small business employers across the nation, both the House and Senate Labor, Health and Human Services Appropriations Committees have rejected additional funding for the U.S. Department of Labor (DOL) to address initiatives regarding misclassification of workers.

The National Association of Home Builders (NAHB) spearheaded this effort, along with its business partners in the Coalition to Promote Independent Entrepreneurs, to urge House and Senate lawmakers to deny a White House funding request for an additional $10 million in the fiscal 2016 budget for DOL to implement worker misclassification enforcement and detection activities.

Last year, DOL granted $10.2 million to 19 states to implement or improve worker misclassification programs. The funds were designated to help states identify instances where employers improperly classify employees as independent contractors or fail to report the wages paid to workers at all.

While several states have existing programs designed to reduce worker misclassification, this was the first year that DOL awarded grants dedicated to this effort.

Moreover, the grant included a “high-performance bonus” to four states (Maryland, New Jersey, Texas and Utah) totaling $2 million for their improved efforts in detecting incidents of worker misclassification.

This could create an incentive for a state workforce agency, when making a worker-status determination, to find misclassification where none exists, the coalition told lawmakers.

Further, NAHB and its business allies said that any attempt that undermines the legitimate uses of independent contractors in the marketplace will have a detrimental impact on companies that do business with independent contractors.

House and Senate lawmakers agreed with us that state workforce agencies should focus on educating their employees about the laws regarding independent contractors rather than appropriating money incentivizing a worker misclassification finding.