From PolitiFact Georgia, Jon Greenberg discusses misclassification in Georgia inlcuding a case in which an administrative judge found that a company that required drivers to form limited liability companies (LLC) and paid them as independent contractors had misclassified the workers. Jon writes:
With health care policy in limbo in Washington, the politicians who would like to be Georgia’s next governor are staking out their own policy outlines. Democratic State Rep. Stacey Evans favors expanding Medicaid, but said the state could take other action as well.
“There are thousands of Georgia workers that are misclassified as independent contractors, so that their employers can wrongfully deny them the benefits that they deserve, including health care,” Evans said Aug. 5. “By expanding Medicaid and classifying workers appropriately, insurance will be available to hundreds of thousands more Georgians.”
We decided to check Evans’ number of misclassified workers, and found she’s on safe ground.Defining misclassification
Some businesses avoid treating workers as employees by calling them an independent contractor. The person might work only for that one business, use equipment the business provides and do exactly what the business tells him or her to do, and yet be labeled as if the person was in business for themselves.
The advantage for companies is they avoid paying a number of employment taxes, including Medicare, Social Security and unemployment insurance. If they offer health insurance, they would sidestep that too.
As Georgia’s Department of Labor put it, “independent contractors are not independent just because that is what their employer calls them, because that is what they call themselves, or because they sign an ‘independent contractor agreement.’ Independent contractor status depends on the underlying nature of the work relationship.”
In a recent case, a state administrative judge ruled that a man who drove for a Georgia limousine service was actually an employee and not an independent contractor, as the company (and the state Department of Labor) claimed. The company had required the man to set up his own limited liability corporation, but the ruling said that made no difference.
The driver used a company car, and he was “given direction as to where to drive, when to drive, how to drive, how often to drive, and the rates to charge customers.”
The judge called this an “extreme” case of misclassification.