Ask Slashdot: Opinions on the State Breaking Its Own Law Against Employee Misclassification?

An anonymous reader writes: I've had the privilege of developing software as an independent contractor for various agencies of a particular state for many years. These past few, however, have seen changes: now I, and almost every other contractor I know, are being managed very differently. This state is now making a widespread practice of using the businesses it awards contracts to as staffing agencies, knowing full well that the people coming in are 1099s and receive none of the benefits or protections of regular employees. These contractors are expected to be on site full-time, are not allowed to use their own hardware or software, and are managed alongside, and perform substantially the same work as other, regular employees. This is apparently done to cut costs.

The State has no legal risk here — that rests solely on the businesses it awards contracts to. But given that this particular state takes a hard line against misclassifying employees, this strikes me as profoundly hypocritical. I am not here to ask for legal advice. Indeed, I have already retained counsel in this matter. Considering additional detail that I won't get into here, Federal law is likely being broken. Since this is also one of the states that have the strict 'three prong' test for classifying employees, the State's own law is definitely being broken.

I thought, maybe somebody should say something. But my lawyer's reaction surprised me. He said — this isn't a big deal, you could just go find another client. And you know what? He's right. I could totally do that. Maybe since we in the IT industry tend to be well paid, nobody should care, and there's no reason complain. I'm not asking for legal advice or a recommendation as to what I should do personally; I'm still forming an opinion on the larger issue here, and I'd like you to share yours.

Comments

Is this a big deal

[Etherwalk]

...what's the question?

The big question is whether state misreporting of employees and IC's is a big deal. Anonymous poster sees gross hypocrisy by his government and is told by legal counsel that it's not a big deal, wants others to weigh in so that he can better conceptualize how he should feel about this--he's looking to third parties for feedback on something that strikes him as morally suspect and affects his life. That's actually an incredibly healthy, rational, and unusual attitude.

Is it a big deal? Yes and no. It's common to have people misrepresent employees as ICs in order to avoid the legal responsibilities of employment--that's *why* the IRS and various states crack down on it. So it's certainly not an *unusual* deal. And if you're making bank, it may not affect you much personally.

But it may affect a lower-income worker who gets treated the same way by the state and is denied overtime benefits, or the woman who's discriminated against by the state's hiring process and finds it much harder to sue, or the corrections officer who doesn't get a pension, for example. So there's some reason to call the state out on it for the public good.

There's *also* a strong argument that they should be called out on it because *they should have to put up with* the employment rules everyone else follows. They're the ones who change the rules, so they should experience having to live with them.

So there are reasons to responsibly disclose, but not much personal benefit to you. You risk a whistleblower sign over your head for the rest of your career unless you do it intelligently. You could sort of go a middle-ground, where you don't go to the press, for example, but do include a note on your taxes that the state has deliberately misclassified you as an independent contractor as part of a systemic process that affects many thousands of employees. I have no idea if the IRS would do anything with it (I'm guessing not), but you would be reporting it. Ah, here we go, the IRS has a way to report fraud:

http://www.irs.gov/Individuals...