Alabama Cracks Down on Employers Who Misclassify Workers

Alabama’s Labor Department agreed Thursday to work with the U.S. Department of Labor to crack down on businesses that classify people as independent contractors when they are really regular employees.

Alabama Labor Commissioner Fitzgerald Washington and the U.S. Department of Labor’s regional director for the wage and hour division, Wayne Kotowski, signed a memorandum of understanding in Montgomery. Kotowski said Alabama is the 16th state to sign an agreement to share information and coordinate enforcement.

Independent contractors pay their own employment taxes, while businesses pay those for regular employees.

Kotowski said that when workers are misclassified at independent contractors, the government misses out on revenue and workers are often denied family and medical leave, overtime pay, minimum wage pay and unemployment insurance. He said legitimate businesses are also hurt because they have to compete against businesses skirting the law.

Washington said more than 1,500 misclassified workers were found in Alabama last year. “And that number is growing each year,” he said.

Kotowski said about two-thirds of the cases result from worker complaints and about one-third from investigations of businesses that have traditionally had the most problems, including restaurants, day care centers, construction and janitorial services.

In fiscal 2013, the department’s investigations resulted in $83 million in back wages for more than 108,000 workers nationwide, he said.