Michigan and Maryland Eye Misclassification

It's no surprise; Michigan and Maryland are joining other states in bringing increased scrutiny at the local level toward the classification of workers as either contractors or employees. The employee misclassification debate is now heating up across the country as the issue escalates, with various agencies now labeling intentional misclassification as a form of tax evasion.

The Michigan Interagency Task Force on Employee Misclassification convened last week to discuss the issue, which was inflamed during a recent inquiry with OSHA into the accuracy of Federal records for injury and illnesses in the construction industry, While many states are focused on the construction industry as a major offender, misclassification is common across many different occupations.

In Maryland. the Department of Labor, Licensing, and Regulation (DLLR) is confronting the issue with random business audits as well as audits targeted to industry hot spots. Department Secretary Thomas Perez claims "20 percent of Maryland employers are misclassifying employees as independent contractors," and that companies that misclassify are unfair to workers, taxpayers and other employers.

Bottom line? When it comes to proper contractor classification, you no longer have to wait for the IRS to confront the issue with your company. 2008 is the year for businesses of every size to come to terms with the fact that agencies at every level -- local, state, and federal -- are looking to recoup lost payroll tax revenue due to improper classification practices. They are awake, they are sharing information, and they are considering it well worth their time to go after the businesses responsible.