RICHMOND, Va. (AP)- Gov. Ralph Northam has signed an executive order establishing a task force to come up with a plan to prevent worker misclassification and payroll fraud.
The state estimates that the misclassification of employees as independent contractors costs Virginia as much as $28 million a year in state income tax collections.
A 2012 legislative report found that one-third of audited employers in certain industries misclassify their employees. By failing to purchase workers’ compensation insurance, pay unemployment insurance and payroll taxes, and failing to comply with minimum wage and overtime laws, employers lower their costs by as much as 40 percent. That places other employers at a competitive disadvantage.
The task force will develop a plan to hold companies working on state contracts accountable if they commit payroll fraud through misclassification.