The New York Times, September 8, 2007, Saturday

Copyright 2007 The New York Times Company

The New York Times

September 8, 2007 Saturday

Late Edition - Final

SECTION: Section B; Column 0; Metropolitan Desk; Pg. 2

HEADLINE: State Takes Aim at Evaders of Wage and Tax Laws

BYLINE: By STEVEN GREENHOUSE

BODY:

Gov. Eliot Spitzer announced the creation yesterday of an interagency task force to step up action against companies that wrongly classify employees as independent contractors to skirt wage and tax laws.

Under an executive order he signed yesterday, state agencies will cooperate more closely in ferreting out cases of misclassification, and if one agency, like the tax department, finds that a company is misclassifying its workers, it is supposed to share that information with other departments, like the State Workers' Compensation Board.

Independent contractors are usually individuals who are in business for themselves and use their own equipment or tools, while employees usually work for employers that supervise them closely, directing when and where they work. Until now, state officials said, when a state agency found that a company was misclassifying workers, it often did not inform other relevant agencies. Mr. Spitzer noted that companies often misclassify workers as independent contractors to avoid paying workers' compensation premiums, unemployment insurance and Social Security taxes, as well as time and a half to employees who work overtime. State officials said companies that misclassify employees put those that follow the regulations at a competitive disadvantage.

''For too long, state government has turned a blind eye on a growing epidemic that is keeping wages and benefits artificially low for working New Yorkers,'' Mr. Spitzer said.

State officials pointed to a study by the Cornell University School of Industrial and Labor Relations that estimated that 10 percent of workers in many industries in the state were misclassified as independents.

Patricia Smith, the state labor commissioner, said state agencies will undertake enforcement action against particular industries, like construction, where misclassification is prevalent. Denis M. Hughes, president of the New York StateA.F.L.-C.I.O., said, ''Today's executive order will go a long way toward eliminating the opportunity for unscrupulous employers to deny working men and women their statutory rights to fair pay, benefits and protections.''

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