Virginia Gov. Terry McAuliffe recently signed an executive order establishing an inter-agency task force that will target worker misclassification and payroll fraud.
“Every Virginian who works hard and follows the rules should get the pay and benefits that they deserve,” Gov. McAuliffe said in a statement on Aug. 15. “This executive order will begin a process to ensure that employers throughout the Commonwealth follow the same rules when it comes to benefits and pay for their employees.”
The executive order states that the misclassification of employees as “independent contractors” undermines businesses that follow the law, deprives Virginia of millions of dollars in tax revenues, and prevents workers from receiving legal protections and benefits.
According to a 2012 report from the Virginia Joint Legislative Audit and Review Commission (JLARC), one third of audited employers in certain industries misclassify their employees. The executive order states that by failing to purchase workers’ comp insurance, pay unemployment insurance and payroll taxes, or comply with minimum wage and overtime laws, employers lower their costs up to 40 percent, placing other employers at a competitive disadvantage.
The purpose of the task force is to develop and implement a comprehensive plan with measureable goals to reduce worker misclassification and payroll fraud in Virginia, according to the executive order. The activities of the task force would include:
• Review statutes and regulations related to worker misclassification and payroll fraud;
• Evaluate current enforcement practices of the agencies involved;
• Develop procedures for more effective inter-agency cooperation and joint enforcement;
• Implement a pilot project for joint enforcement;
• Develop educational materials and an outreach strategy for employers;
• Advise on any technological improvements in worker misclassification and payroll fraud detection; and,
• Recommend any appropriate changes to relevant legislation or administrative rules.
The task force will be chaired by Virginia Secretary of Commerce and Trade and will include representatives from the Virginia Employment Commission, the Department of Labor and Industry, the Department of Professional and Occupational Regulation, the State Corporation Commission’s Bureau of Insurance, the Department of Taxation, and the Workers’ Compensation Commission.
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