Connecticut Attorney General's Office

Press Release

Attorney General Seeks Crackdown On Companies That Misclassify Employees As Independent Contractors

March 17, 2010

            Attorney General Richard Blumenthal today announced measures enabling a crackdown on companies that illegally misclassify employees as independent contractors -- recommendations of a state commission on worker misclassification that he co-chairs.

            “A crackdown on misclassification cheating is long overdue -- because it does devastating harm to taxpayers, workers and honest businesses,” Blumenthal said. “Calling workers independent contractors when they are really employees costs workers benefits, taxpayers revenue and honest businesses a fair opportunity to compete for work.”

            The Joint Enforcement Commission on Worker Misclassification, which Blumenthal co-chairs with acting Labor Commissioner Linda Agnew, has investigated misclassification for a year.

            The commission’s proposed measures include increasing the penalty from $300 per violation to $300 a day per violation; strengthening criminal sanctions against misclassification and joint investigations of misclassification complaints with other state agencies.

            “Misclassification is cheating -- plain and simple -- that has devastating economic impacts,” Blumenthal said. “Companies that misclassify employees as independent contractors harm not only workers, but other businesses. Failing to pay taxes and provide health and other benefits enables cheaters to underbid honest businesses.

“Employers who misclassify workers increase costs for law-abiding businesses and taxpayers, compelling them to pay higher taxes and fees to compensate for unpaid revenue. We will fight to prevent cheaters from undercutting companies that obey the law, providing workers benefits and paying taxes and fees.

“Companies that misclassify workers shirk their legal and moral duty to provide vital benefits, such as health insurance, workman’s compensation and other programs critical to employee welfare. Misclassification undermines prosperity and increases the state budget deficit by denying workers benefits and the state taxes and fees. Misclassified workers are forced into state insurance programs or emergency rooms, compelling taxpayers to cover health costs that are employers’ responsibility.

“The present penalty -- $300 per violation -- is inadequate and ineffective, an insignificant expense lawbreakers dismiss as the cost of doing business. Stopping this unscrupulous practice -- which costs taxpayers and workers millions of dollars a year -- demands a more powerful penalty, at least $300, perhaps even $1,000, a day per misclassified worker.

“I will fight to stop companies from falsely claiming their employees are independent contractors, denying them wages, benefits and rights and dodging state taxes and fees.”

            Other misclassification commission members are the Chief State’s Attorney’s Office, the Department of Labor, the Department of Revenue Services and the Workers Compensation Commission.

The commission is advised by a group consisting of representatives of labor unions, industry associations and other business groups.

In its first year, the commission:

·         Initiated joint state agency investigations into suspected violations of worker misclassification laws;

·         Created a single data base for all misclassification complaints submitted to state agencies

·         Agreed to establish a website to educate workers about misclassification. Through the website, workers will be able to file complaints in their names or anonymously. The website is expected to go live later this month.