U.S. Labor Dept., IRS, states join to combat worker misclassifications

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BOSTON, MA — The U.S. Secretary of Labor has signed memoranda of understanding with the Internal Revenue Service as well as with the labor departments of several states in an effort to improve its efforts to end the practice of purposeful employee misclassifications.

The memoranda of understanding will allow the Labor Department to share information and coordinate law enforcement with the IRS and participating states in order to detect and stop the practice by some employers of misclassifying employees as non-employees to avoid providing employment protections under federal and state law.

“We’re here today to sign a series of agreements that together send a coordinated message: We’re standing united to end the practice of misclassifying employees,” said Labor Secretary Hilda L. Solis at a signing ceremony with officials from the IRS and 11 state agencies. “We are taking important steps toward making sure that the American dream is still available for all employees and responsible employers alike.”

Lawmakers, including Rep. Rosa DeLauro, a Democrat from Connecticut, one of the 11 states that entered into the agreement, applauded the move.

“The memorandums of understanding signed (Thursday) will help to prevent the improper classification of employees as independent contractors or other non-employees, which can cost workers valuable time and pay,” DeLauro said in a statement. “I am proud that Connecticut will help to lead this worthy effort, and look forward to the many benefits this change will bring, both to our workers and our economy as a whole.”