NC Misclassification Confusion
The misclassification confusion still exists in North Carolina. Recently, North Carolina’s Governor Perdue had drawn together a task force to lessen the number of Workers Comp scofflaws that exist in North Carolina. Earlier this year, 30,000 North Carolina employers did not have proper coverage for their workers.
I had covered this same classification/misclassification issue in the past as this issue seems to rear its ugly head every time a state decides to heavily pursue companies that are seeking to avoid paying workers compensation insurance and taxes. This seems to occur once every six months.
I wanted to immediately straighten out an overused term as we received two emails and one phone call when the article appeared in the Raleigh News & Observer. Your workers compensation classification codes are totally different from the term misclassification as used in this case.
Questioning how your covered workers are classified in your business in not illegal whatsoever if done properly and within time limits. Governor Perdue and the North Carolina Insurance Commissioner Wayne Goodwin are pursuing companies that have no coverage for workers that are possibly employees.
The word misclassified in this instance means the employer has allegedly classified the employees as independent contractors to avoid paying workers compensation and taxes on the employees. This has very little to do with questioning the classification codes or any other type of information on your policies or audits.
If you are in the State of North Carolina (or any other state) and you feel that your policies or premium audits are not correct, you have a right to question whether or not your current employees were misclassified for your current polices and in the three years prior (in most states).
We have never encouraged and strictly discouraged our clients or potential clients from classifying employees as contractors. Trying to avoid paying workers comp insurance and employment taxes will eventually turn out to be a very bad business practice.
I do not wish to discourage any company from hiring sub-contractors.
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