WASHINGTON (PAI)--The Labor Department is releasing some details of its new initiative to pursue employers who misclassify workers as “independent contractors” -- a tactic that vicious and venal employers use to cut costs while leaving workers unprotected by labor law, wage and hour law and even Social Security and Medicare.

Discussing her department’s proposed budget for the year starting Oct. 1, Labor Secretary Hilda Solis told Congress on March 10 that the initiative will pursue employers in fields where misclassification is rampant, such as trucking and construction.  DOL would also allot more money, and 10 full-time workers in its legal office, to prosecute large multi-state companies that engage in misclassification nationwide.

Pursuing misclassification has been a key cause for the Teamsters and the Laborers, in particular.   Misclassified workers must pay their own Social Security and Medicare taxes --the worker’s and the employer’s share -- amounting to more than 14% of gross pay. They’re also not covered by workers’ comp laws, which saves employers money.  And “independent contractors” can’t organize into unions.

As a result, employers who misclassify their workers -- and underpay them -- get a competitive advantage, too.  Solis wants to put a stop to that abuse.

“Employers who misclassify their employees as independent contractors often avoid paying the minimum wage and overtime. They evade payroll taxes, and often do not pay for workers’ compensation or other employment benefits. As a result, employees are denied the protections and benefits of this nation’s most important employment laws, and their employers gain an unfair advantage in the market place,” her prepared statement for the House Appropriations Labor-HHS subcommittee said. . 

“Employees are particularly vulnerable to misclassification in these difficult economic times.  The FY 2011 budget requests $25 million for a multi-agency initiative to strengthen and coordinate federal and state efforts to enforce statutory prohibitions, and identify and deter employee misclassification as independent contractors,” she said.

Half of that money will go to hire 90 new investigators to probe misclassification and “support targeted investigations that focus on industries where misclassification is most likely to lead to violations of the law, and training for investigators in the detection of workers who have been misclassified.”   DOL will also go after the employers for unpaid payroll taxes for misclassified workers, Solis said.  

And most of the rest of the money -- $10.9 million -- would go for “a pilot program

to reward states that are the most successful (or most improved) at detecting and prosecuting employers that fail to pay their fair share of taxes due to misclassification and other illegal tax schemes that deny the federal and state unemployment insurance trust funds hundreds of millions of dollars annually,” she said.  

The Labor Department will also seek “legislative changes that will require employers to properly classify their workers, provide penalties when they do not, and restore protections for employees who have been classified improperly,” Solis said.   She did not detail what they were. 

“With these efforts, we intend to reduce the prevalence of misclassification and secure the protections and benefits of the laws we enforce. This effort strikes at the core of the department’s mission – and the hard working people of this country deserve no less,” she declared.

Other Labor Department budget proposals sent to Congress include:

* A request for 1,672 full-time workers, in the year starting Oct. 1, for wage and hour enforcement, to go after “wage theft” nationwide.   That’s a 29% increase in personnel than in fiscal 2009, which ended last Sept. 30.  

“As new investigators grow into their jobs, they will be an even stronger force for securing compliance with basic labor standards protections. The FY 2011 Budget request of $244.2 million for the Wage and Hour Division will support targeted investigations, meaningful compliance assistance, and reduce repeat violations of minimum wage, overtime, and workplace safety laws,” Solis said. 

* Returning the Occupational Safety and Health Administration to enforcement o job safety and health laws, not just being a consultative agency for business.  “OSHA is restoring its capacity to strongly enforce statutory protections, provide technical support to small businesses, promulgate safety and health standards, strengthen the accuracy of safety and health statistics, and ensure that workers know about the hazards they face and their rights under the law,” Solis said.  

The Obama administration wants $573.1 million and 2,360 workers for OSHA in the year starting Oct. 1, up $14.5 million and 25 workers over the current fiscal year.  It also plans to redirect 35 workers from “compliance assistance” -- the ineffective business-friendly OSHA stance touted by anti-worker GOP President George W. Bush

-- to enforcement.   

Redirecting OSHA to enforcement will “support the department’s goal to reduce workplace injuries by targeting establishments and industries with the highest injury, illness, and fatality rates – with the goal of reducing by 2% per year the number of fatalities associated with the four leading causes of workplace death in OSHA’s juris-diction: falls, electrocution, caught in or between, and struck by,” her statement said.