A Louisiana provision protecting first-time offenders when classifying employees as independent contractors runs afoul of federal law and has been suspended. Meanwhile, Virginia announced a guilty plea in the first misclassification-related charges brought by the state’s Worker Protection Unit.
Louisiana. A Louisiana “safe harbor” provision protecting businesses that make first-time mistakes when classifying employees as independent contractors has run afoul of the US Department of Labor, the Heartland Daily News reports .
Passed earlier this year, the Fresh Start Program, known as Act 297 , allows employers to reclassify workers and avoid related withholding tax, unemployment tax, interest or penalties for prior periods upon first offenses. Waiving employer liability for unemployment insurance back taxes is “not permissible under federal unemployment compensation law,” according to the DOL.
The legislation was intended to shield employers who come forward voluntarily as well as those regulators catch, providing reclassification occurs within 60 days.
Virginia. Virginia Attorney General Mark Herring reported Dec. 8  a guilty plea in the first independent contractor misclassification-related charges brought by his office’s Worker Protection Unit, which was formed earlier this year  to focus on independent contractor misclassification.
Richmond Drywall Installers Constructors Inc. pleaded guilty to five felony embezzlement counts and was ordered to pay $21,000 in fines and restitution. Richmond Drywall Installers is a subcontractor working on the Virginia’s new General Assembly Building in Richmond.
“Businesses that take advantage of their workers through misclassification, wage theft or payroll fraud are not only stealing from their hardworking employees, but they are also stealing from the Commonwealth,” Herring said.