Worker Misclassification Rampant, VA Governor Convenes A Task Force

The order by Virginia Governor Terry McAuliffe follows a Virginia legislative commission audit that found that as many as a third of employers in some industries misclassify workers, write Troutman Sanders attorneys David E. Constine III and D. Eugene “Gene” Webb, Jr. The tax force is charged with developing a plan to reduce worker misclassification and payroll fraud by improving coordination among a number of state agencies. Misclassification results in failure to pay workers’ compensation, unemployment insurance and payroll taxes, and failure to comply with minimum wage and overtime laws, thereby giving the the non-compliant employers a huge competitive advantage and lowering state tax collections by millions of dollars a year. “Governor McAuliffe’s action – and action by other states – should prompt employers to conduct self-audits of worker classifications, to ensure that they do not become the subject of government scrutiny,” the writers conclude.