Stiffer civil penalties, criminal sanctions and more aggressive investigations are necessary to stem the tide of worker misclassifications among unscrupulous Connecticut employers, authorities said Wednesday.
Attorney General Richard Blumenthal said these are among remedies the Joint Enforcement on Worker Misclassification, which he co-chairs, will recommend to state lawmakers. Acting Connecticut Labor Commissioner Linda Agnew is the other co-chair.
“A crackdown on misclassification cheating is long overdue — because it does devastating harm to taxpayers, workers and honest businesses,” Blumenthal said in a statement following a press conference Wednesday announcing the recommendations.
“Calling workers independent contractors when they are really employees costs workers benefits, taxpayers revenue and honest businesses a fair opportunity to compete for work,” he said.
Among the commission’s recommendations is raising the penalty from $300 per violation to $300 to $1,000 a day per violation.
Violators also would be subject to criminal sanctions. Moreover, enforcement officials would have the authority to mount joint investigations of misclassification complaints with other state agencies.
A Hartford Business Journal investigation last summer found that the state’s two-year effort to stem the practice had resulted in more than 220 stop-work orders at construction sites statewide.
One University of Connecticut economist said the practice is part of an underground economy that costs state taxpayers about $10.5 billion in, among other things, uncollected workers compensation and payroll taxes, and unreimbursed medical care for workers.
HBJ’s investigation found that Connecticut’s enforcement efforts were hampered by a lack of staff and provisions in state law to bar repeat offenders from getting private work.
Neighboring New York and Massachusetts, however, have in place such provisions and have mustered a more effective crackdown.
Other misclassification commission members are the Chief State’s Attorney’s Office, the Department of Revenue Services and the Workers Compensation Commission.
The panel is advised by a group consisting of representatives of labor unions, industry associations and other business groups.
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