State’s crackdown on worker misclassification not all it’s cracked up to be

There is no question that the problem of misclassification is widespread in New Hampshire. Since 2012, the state Department of Employment Security has found cases of misclassification in 23 percent of the 922 audits it has conducted. That means that employers and employees avoided payroll deductions on some $37.7 million in wages, including some $677,000 in unemployment compensation taxes, not including fines and penalties.
The state Department of Labor – which oversees various labor laws, including the requirement that companies carry workers’ compensation coverage – stepped up its enforcement in 2013, when it fined 20 firms for misclassification, compared to just one in 2012. But that was still far short of the 93 Employment Security audits that found misclassification during the same year.
Of those cases, the agency initially proposed that 24 firms pay $182,650 in fines for misclassification dating back to 2011 – fines that were lowered to less than $70,000 after hearings were held.
Those figures don’t include cases like Dean’s that are still pending.
The reason behind the discrepancy between the two agencies – both in the number of cases and the amounts fined – are not clear, particularly since both belong to a joint task force on misclassification for which they share information on violations.
Officials for both sides point to the different agencies’ definitions of independent contractors. Labor has seven criteria, while Employment Security has three, not to mention the state Department of Revenue Administration and the federal Internal Revenue Service, which have their own definitions. That means someone might be a worker under one set of laws might be a contractor under another.

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