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V
irginia
C
apitol
C
onnections
, S
ummer
2015
11
Terry McAuliffe issued Executive Order 24 on August 14, 2014,
entitled “Establishing an Inter-Agency Task Force on Worker
Misclassification and Payroll Fraud”: The misclassification of
employees as “independent contractors” undermines businesses that
follow the law, deprives the Commonwealth of millions of dollars in
tax revenues, and prevents workers from receiving legal protections
and benefits.”
The Secretary of Commerce and Trade is leading the Governor’s
Task Force in its preparation of a report and recommendations on the
issue. Other participating agencies are:
• Virginia Employment Commission (VEC)
• Workers’ Compensation Commission (VWCC)
• Department of Labor and Industry (DOLI)
• Department of Professional and Occupational Regulation (DPOR)
• Department of Taxation (TAX)
• State Corporation Commission Bureau of Insurance (SCC)
The Taskforce’s initial report was presented to Governor
McAuliffe on December 1, 2014. It established a work plan with a
timeline for researching and setting parameters for the implementation
of a multi-agency pilot program by July 1, 2015. While some of the
parameters are being finalized, the program will include employer
outreach and education, the ability of agencies to better share data
and information, and enhanced collection of data on the number and
instances of employee misclassification. Results of the pilot program
are to be reported by November 1, 2015.
What is One Agency Doing?
Commissioner of Labor and Industry C. Ray Davenport
announced on June 2, 2015
11
, the adoption of a new Virginia
Occupational Safety and Health (VOSH) policy directed at preventing
the misclassification of workers in VOSH cases:
“The Department today is committing itself to aggressively
pursuing Governor McAuliffe’s initiative to root out the
destructive practice of misclassification of workers in Virginia.
Misclassification of workers as independent contractors
constitutes payroll fraud, and denies hard-working Virginia
employees of basic legal protections such as workers’
compensation, family and medical leave, and unemployment
insurance. Misclassification also cheats those honest
employers and contractors who properly classify employees,
since employers who misclassify can undercut their bids due to
lower operating costs.”
New VOSH Policy
12
The VOSH Program conducts thousands of safety and health
inspections annually, and starting
July 1, 2015
, will take the following
actions in worker misclassification cases:
• If VOSH penalties are proposed, penalty reductions for size and
good faith will NOT be afforded to the employer.
• In construction inspections each contractor will be asked to provide
its Department of Professional and Occupational Regulation
(DPOR) contractor›s license AND proof of the DPOR license for
any subcontractors.
• Make a referral to DPOR if a contractor has used an unlicensed
subcontractor (DPOR sanctions may include fines, probationary
terms, suspension or license revocation).
• For contracts under $1,000, VOSH will make a referral to the
Virginia Employment Commission (VEC) and/or the Virginia
Workers’ Compensation Commission (VWCC) for potential audits
of employment practices. Referrals may be made for contract
values over $1,000 as well.
The new policy and education and outreach materials can be
found at:
http://www.doli.virginia.gov/1
NC’s $467 million problem: Abuse of workers, failure to collect taxes”, Mandy
Locke, David Raynor, Rick Rothacker and Franco Ordonez, Charlotte Observer,
October 6, 2014.
2
More Workers Are Claiming ‘Wage Theft’”, Stephen Greenhouse, NewYork
Times, September 2, 2014
3
Executive Order 24, “Establishing an Inter-Agency Task Force onWorker
Misclassification and Payroll Fraud”, August 14, 2014.
4
Review of Employee Misclassification in Virginia”, Senate Document No. 10,
Joint Legislative Audit and Review Commission (JLARC), June, 2012, page 16.
5
JLARC Report, pages 14-20
6
JLARC Study, page iii
7
http://www.dol.gov/whd/workers/misclassification/8
http://www.dllr.state.md.us/workplace/9
The Economic Costs of Employee Misclassification in the State of Indiana
10
The Economic Costs of Employee Misclassification in the State of Illinois
11
DOLI Misclassification Public Service Announcement
12
DOLI Policy Memorandum
Worker Misclassification
from page 9
healthcare access, and the benefits of increasing
coverage of both of these modalities is far reaching,
beyond just healthcare. It will also support local
economies, transportation networks, and day-to-day
life of residents in Southwest Virginia. In addition,
obstacles of funding, integrating with the Health
Information Exchange (HIE), credentialing, licensing,
and selecting appropriate clinical models present
ongoing challenges that need to be addressed.
Ultimately, we are seeing the development of a
network in Southwest Virginia centered on meeting
the needs of veterans via mechanisms to increase
access to services and efficiencies in how that access
is increased. A cohesive transportation-telehealth
system will help ensure high quality care and
availability of services for veterans.
Mike Mallon is a Community Health Specialist
with the Virginia Department of Health, Office of
Minority Health and Health Equity.
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