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New Hampshire Combats Worker Misclassification

New Hampshire Governor John H. Lynch signed Executive Order 2010-3 on Friday which directs departments and agencies who deal with employee misclassification to work together, and creates the Joint Task Force on Employee Misclassification Enforcement to ensure that existing regulations are enforced.  The State of New Hampshire Revised Statutes Annotated (RSA), section 281-A:2, paragraph VI(b) lists 12 specific criteria (A-L) which must all be met in order for an individual to be considered an independent contractor rather than an employee.  Just as with the IRS 20 Questions which we wrote about last week, by New Hampshire law, if any of the 12 criteria are not met by an individual who “performs services for pay for an employer, [he] is presumed to be an employee.”  Penalties for employers who misclassify their workers in order to avoid paying workers’ compensation insurance can be stiff – fines of up to $2,500 plus $100 for each misclassified employee times the number of days the workers were uninsured.  Some instances may be subject to criminal sentencing as well.

In a guest commentary written for The Nashua Telegraph of Nashua, New Hampshire, George N. Copadis and Deborah L. Stone describe some of the repercussions of worker misclassification.  Mr. Copadis is the commissioner of the New Hampshire Department of Labor, and Deborah L. Stone chairs the New Hampshire Task Force to Study Employee Misclassification, which was established in 2008.  In the article, they explain that worker misclassification is not only fraud and therefore illegal, but it is harmful to the business community and to the economy.  They explain that some companies avoid providing workers’ compensation to employees by misclassifying them, and that can “decrease payroll costs by as much as 30 percent for those companies that are violating the law”, allowing those companies to undercut competitors’ project bids.  They point out, as Construction Citizen has in the past, that:

“By reducing the instances of misclassification, we will help to level the playing field for businesses that play by the rules.”

New Hampshire has a website where you can report employers who illegally classify employees as independent contractors or other workers’ compensation problems.  It is part of the effort to enforce the law and eliminate this harmful practice.

We are grateful to one of our readers of Construction Citizen for alerting us to this important story.  You may send us a message at any time.  Just click on Get Involved under About Us in our menu, and fill out the Contact form.  We love hearing from you!

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