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The Department of Labor announced agreements on Monday to cut down on wage theft through misclassification of workers. The agreements, with the Internal Revenue Service and a number of states, allow improved information sharing and law enforcement efforts against employers who misclassify workers as independent contractors to avoid paying benefits or overtime and other pay.
Cracking down on wage theft has been a major focus for Labor Secretary Hilda Solis:
In 2010, the Labor Department collected nearly $4 million in back wages on behalf of about 6,500 employees who had been misclassified, a 400 percent increase over the amount collected in 2008. The department has hired about 300 additional investigators to probe wage theft complaints.
That includes cases like this:
Earlier this year, for example, the department recovered over $219,000 in back wages for 44 Boston-area restaurant workers who were misclassified as independent contractors by two restaurants. The restaurants had failed to pay them overtime and also weren't paying their payroll taxes.
Recently, the Department of Labor has been investigating large residential construction contractors. There are many more such examples out there. Wage theft takes many forms, from workers who work through lunch breaks or continue working after they've clocked out to those who simply aren't paid for their work; misclassification of workers as independent contractors frames exploited workers as entrepreneurs, a category our society values, while really depriving them of the freedom of self-employment and the stability and benefits of being a direct employee.