Connecticut Joins the Get Tougher on IC Compliance Club
Last month, Connecticut Governor Jodi Rell signed into law “An Act Implementing the Recommendations of the Joint Enforcement Commission on Employee Misclassification.” The legislation marks Connecticut’s joining the Get Tougher on IC Compliance Club, and provides additional conduits for state revenue. This law becomes effective on October 1, 2010.
The new law follows a national trend of making it more difficult for employers to misclassify their workers by creating a complaint process for workers who believe that they have been misclassified as independent contractors.
What does the new law provide?
- It increases the state’s civil penalty for independent contractor misclassification from $300 per violation to $300 per day per violation.
- It allows for a “Stop Work Order” that can close down a business until the Connecticut Labor Department authorizes the company to reopen.
- If the company violates the Stop Work Order it will be fined $1000 per day.
- If someone knowingly misrepresents an employee as an independent contractor, or provides false, incomplete or misleading information for the purpose of paying a lower premium on a policy, they become guilty of a felony…
So now Connecticut joins the Federal government and countless other states in getting tougher on misclassification of workers.
The members of this club have all learned to increase the collection of revenue during tough economic times by “Leveling the Playing Field” for employers and “Protecting Worker’s Rights.” They can say they are taking the high ground for the good of all; however, they are also providing a new conduit for increased revenues.
Note: This is not a new trend. It has been brewing for several years. US Congressman Lynn Woolsey of California said, “Employers who misclassify their employees as independent contractors rob workers of needed pay and benefits and cost government at all levels substantial uncollected revenue.”
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(By the way every element of that old bill (HR 6111) is still active in current bills of both houses, and the climate is much friendlier for to them to pass today. In fact, President Obama has told the Senate and House to give him such a bill to sign).
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IC Compliance is a biased system and the consequences of being wrong are expensive
The government employment tax auditors and labor law enforcement investigators have a primary mission (and biased) of identifying misclassified independent contractors and then collecting back fees and taxes, with interest and penalties.
Once you are determined to be “out of compliance” in most cases you are placed on their “Watch List” to insure compliance with their ruling, which typically leads to follow-up audits and investigations.
Be ready before they knock on your door.
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