For the second year in a row, the Louisiana Workforce Commission identified a record 19,956 workers that employers misclassified as independent contractors in 2015. The agency also found employers had more than $50 million in unreported taxable wages and about $1.5 million in unreported and unpaid unemployment insurance taxes.
The National Employment Law Project says the practice of classifying employees as independent contractors robs workers of legal protection and unemployment and workers’ compensation insurance funds of billions of dollars each year. According to the LA commission, misclassification hurts employers who play by the rules, putting them at a competitive disadvantage. Employers who misclassify workers as contractors can cut nearly 30% in payroll and related taxes that would otherwise be paid for employees. The practice is widespread, but occurs most frequently in construction, leisure, and hospitality.