We talked about how some enterprising political party could put together an economic agenda that could include something more than the Earned Income Tax Credit and that agenda might include a discussion about why so many people who should be entitled to overtime pay don’t get any.
I started thinking about overtime pay because my middle son, who barely talks at all, went into a long, detailed explanation a couple of weeks ago on why he was working additional shifts and hours and EXACTLY what that means in terms of what he will make the next pay period. Overtime he understands. This is also true in my law practice. I can have someone in front of me who answers questions with “yes” or “no” but if we’re looking at their pay record they become very engaged and can tell me at length when and why they picked up the hours with the higher wage. They’re the expert. They are happy to explain it to me.
So overtime would be a good thing to talk about and another good thing to talk about might be why so many people who should be employees are being told that they are independent contractors.
Many workplace experts say a growing number of companies have maneuvered to cut costs by wrongly classifying regular employees as independent contractors, though they often are given desks, phone lines and assignments just like regular employees. Moreover, the experts say, workers have become more reluctant to challenge such practices, given the tough job market.
Companies that pass off employees as independent contractors avoid paying Social Security, Medicare and unemployment insurance taxes for those workers.
One federal study concluded that employers illegally passed off 3.4 million regular workers as contractors, while the Labor Department estimates that up to 30 percent of companies misclassify employees.
This is Richard Cordray in 2010. Cordray was the Ohio AG when this was written but is now the head of the CFPB. Cordray chose to portray this as a fairness issue with one group of employers playing by the rules and another group gaining an unfair advantage by flouting the rules. That’s one way to do it. I’m an employer and I don’t think it’s fair if I follow the rules and other employers don’t. I bet I’m not the only one who would see it that way.
â€œItâ€™s a very significant problem,â€ said the attorney general, Richard Cordray. â€œMisclassification is bad for business, government and labor. Law-abiding businesses are in many ways the biggest fans of increased enforcement. Misclassifying can mean a 20 or 30 percent cost difference per worker.â€
From the employee perspective, one might focus on this:
This is an even more striking comparison in 2014. The Social Security wage base is expected to increase from $113,700 for 2013 to $117,000 for 2014. Thatâ€™s not the only thing to keep in mind, of course, but it does suggest that it can be shortsighted to turn down employee status. Apart from tax law, employee status carries a host of nondiscrimination laws, pension and benefits laws and wage and hour protections that apply to employees but not to independent contractors.
So minimum wage, overtime and real employees rather than misclassified “independent contractors”. Nearly everyone has a stake in that discussion and has some personal experience with it.