South Dakota joined 29 other states earlier this month in efforts to combat independent contractor misclassification when it signed a memorandum of understanding with the federal government.
The memorandum calls for the state and the US Department of Labor’s Wage and Hour division to conduct joint investigations and share information to help curtail misclassification.
“South Dakota is committed to both protecting workers’ rights and providing a fair business environment for our state’s employers,” South Dakota Labor and Regulation Secretary Marcia Hultman said in a statement.
Misclassification can lead to lower tax revenue as well as lower revenue for state unemployment insurance and workers’ compensation funds, according to the Wage and Hour Division.
In the 2015 federal fiscal year, Wage and Hour Division misclassification investigations garnered more than $74 million in back wages for more than 102,000 workers.