George Costanza, meet Eliot Spitzer.
The New York Governor is in the business of putting jerk employers out of business, namely those who misclassify their workers so they can skirt labor laws, reports the NY Times.
The [NY labor] commissioner, M. Patricia Smith, said the Spitzer administration was focusing on misclassification because it costs the state a significant amount in unemployment insurance taxes and workers’ compensation premiums while denying many workers overtime pay.
As Attorney General, Spitzer sought punitive damages from jerk companies on misclassification.
He brought enforcement actions against two supermarket companies, Gristedes and Food Emporium, as well as their delivery companies.The companies said their grocery deliverymen did not have to be paid minimum wage or overtime, under the theory that they were independent contractors and not employees. Each supermarket company settled for $3 million.
Mr. Spitzer also took action against several well-known Manhattan restaurants and a company that provided them with bathroom attendants, accusing them of misclassifying the attendants as independent contractors and sometimes paying as little as $2.14 an hour, well below the federal minimum wage of $5.15 an hour.
Misclassification of workers is common in New York state.
In February, researchers from Cornell University issued a report saying that 704,000 of the seven million private-sector workers in New York State were misclassified as independent contractors and that as a result the state was being shortchanged $175 million in unemployment insurance taxes each year.
Under the state’s definition, independent contractors are not employees but are considered to be in business for themselves; employees are those hired to accomplish specific tasks as employers closely supervise their work and decide the hours, pace, place and nature of their labor.
But that's just the tip of the iceberg. The problem is a national epidemic.
- A U.S. Department of Labor study conservatively estimated that 10-30% of all employers misclassify their employees.
- Recent state-level studies have found employer misclassification rates ranging from 10-20% (Illinois 20%; Maine 11%; Massachusetts 19%; New York 10%).
- Although national figures on the number of misclassified employees are not available, the number of misclassified workers in Illinois, Maine, Massachusetts, and New York alone adds up to approximately 1.8 million.
See the Carpenters' research page on misclassification for sources and other information.