Washington — Misclassifying employees as independent contractors not only can cost workers tens of thousands of dollars in annual lost wages, but it can also hurt their fellow citizens, according to a recent Economic Policy Institute report.
EPI, which describes itself as “a nonprofit, nonpartisan think tank,” analyzed 11 “commonly misclassified jobs,” including those in construction and trucking. It found that misclassification can cost truck drivers between $13,760 to $23,266 a year. For construction workers, the range is $13,186 to $20,399.
A chart in the report also includes data for light truck delivery drivers, home health and personal care aides, retail sales workers, and landscaping workers, among others.
“Workers misclassified as independent contractors lose out on critical protections, benefits and labor rights, including the minimum wage, overtime pay, unemployment insurance, the right to form a union and antidiscrimination protections in most states,” an EPI press release states.
“Additionally, these workers must bear the full financial costs of Social Security and Medicare contributions, rather than split it evenly with their employer.”
Misclassification also reduces the amount of money in the “social insurance system” by up to 30% per worker, the report states. That’s because independent contractors don’t pay into the workers’ compensation or unemployment insurance systems.
“Embedding strong legal definitions – like the ABC test – in state and federal law is fundamental to ensuring that employees are not improperly classified as independent contractors,” the release states. “These strong legal tests must also be paired with strong enforcement mechanisms to uphold workers’ rights and deter employers from violating the law.”
