Underground economy fight takes national stage

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TUMWATER The Department of Labor & Industries (L&I) strengthened its commitment to fighting the underground economy today by signing a memorandum of understanding with the U.S. Department of Labor, partnering in the battle against improper classification of employees.

The agreement allows the Labor Department to share information with L&I in order to better target the misclassification of employees. L&I Director Judy Schurke and U.S. Department of Labor Secretary Hilda Solis signed the agreement this morning.

L&I has similar data sharing agreements in place with other state agencies.

Employee misclassification occurs when an employer classifies and treats a worker as an independent contractor even though legally the structure and circumstances of the relationship means the worker is an employee.

Employers who misclassify their employees as independent contractors avoid paying unemployment taxes and workers' compensation insurance premiums. This allows these employers to undercut their competition and make it harder for legitimate businesses to compete.

The worker is also harmed by this underground economy.

"When employers fail to pay workers' compensation and unemployment insurance premiums on their worker's behalf, it is harder for the misclassified workers to collect the benefits they deserve if they are hurt on the job or laid off," said Schurke. "Misclassified workers also may not be paid the minimum wage and overtime they are owed by law."

Washington has specific guidelines to determine if a worker is classified as an employee or an independent contractor. Employers with questions about classifications, should contact their local L&I office.


For media information: Selena Davis, Selena.Davis@Lni.wa.gov, L&I, 360-902-5183.

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