Ohio AG targets worker misclassification

Chris Rizo Feb. 20, 2009, 11:43am

Richard Cordray (D)

COLUMBUS, Ohio (Legal Newsline)-Ohio Attorney General Richard Cordray says he and other state officials are taking aim at employers who misclassify workers in order to skirt taxes and other required payments.

The Democratic attorney general said employee misclassification -- where an employer misclassifies a worker as an independent contractor -- is part of an "underground economy" that harms workers and costs the state and local governments millions of dollars annually through lost Bureau of Workers' Compensation premiums and income tax revenues.

The attorney general's office said in a report that worker misclassification may cost the stat $100 million in unemployment compensation, more than $510 million in BWC premiums and nearly $180 million in lost state income tax revenues.

The report said the practice also cost local governments more than $100 million in local income tax revenues in 2006, and cost school districts $7.8 million in 2008.

"This is a problem that affects everyone, but most people don't know about it," Cordray said. "By cutting corners, some employers are in effect stealing from the rest of us."

The attorney general said agencies such as his office, the Ohio Department of Job and Family Services, Ohio Department of Taxation, and Ohio Bureau of Workers' Compensation have joined forces to combat employee misclassification.

"It is time to level the playing field for those businesses that play by the rules," Cordray said.

Under an agreement among the state agencies, the departments have agreed to share relevant information and coordinate enforcement efforts against businesses that misclassify their workers.
Additionally, officials have agreed to make recommendations to policymakers and elected officials on broader measures to prevent misclassification.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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