ABSTRACT. Employers wrongly label their employees as independent contractors – a phenomenon known as misclassification – in many industries throughout the United States. Port trucking, package delivery, and construction are three cases in point. Misclassification deprives workers of the protection of numerous labor and employment laws. Misclassified workers don’t pension and health benefits, and are not covered by unemployment insurance and workers’ compensation funds. Employers save 30% on payroll costs, including these fund contributions as well as social security and other taxes. While data on misclassification are sparse, studies have shown that thirty per cent of employers may misclassify their employees. Partly in response to lost tax revenues, states and the Federal government have begun to pass laws and boost enforcement of employment laws, resulting in growing penalties on employers for what is now labeled “payroll fraud.” pp. 7–25
JEL Codes: F16; J08; J21

Keywords: independent contractors; misclassification; payroll fraud; contingent work; wage theft; precarious work; port trucking

How to cite: Bensman, David (2014), “Misclassification: Workers in the Borderland,” Journal of Self-Governance and Management Economics 2(2): 7–25.

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