Governor Northam signs executive order establishing interagency task force on worker misclassification and payroll fraud

RICHMOND—Governor Ralph Northam today signed an Executive Order establishing an interagency task force on worker misclassification and payroll fraud. The misclassification of employees as “independent contractors” undermines businesses that follow the law, deprives the Commonwealth of millions of dollars in tax revenues, and prevents workers from receiving legal protections and benefits.

“Treating Virginia workers fairly is central to building an economy that works for everyone, no matter who you are or where you live,” said Governor Northam. “Every employer in the Commonwealth should be playing by the same rules and this task force will come up with a comprehensive plan to make sure workers aren’t missing out on the protections and benefits they would receive if properly classified.”

A 2012 report of the Joint Legislative Audit and Review Commission (JLARC) found that one-third of audited employers in certain industries misclassify their employees. By failing to purchase workers’ compensation insurance, pay unemployment insurance and payroll taxes, or comply with minimum wage and overtime laws, employers lower their costs as much as 40%, placing other employers at a competitive disadvantage.

The task force will develop and implement a comprehensive plan with measurable goals, including identifying ways to hold companies working on state contracts who commit payroll fraud through misclassification of workers accountable, and identifying ways to deter future inappropriate conduct by recommending enforcement mechanisms.

Secretary of Commerce and Trade Brian Ball will chair the task force. It will include representatives from the Virginia Employment Commission, the Department of General Services, the Department of Labor and Industry, the Department of Professional and Occupational Regulation, the State Corporation Commission’s Bureau of Insurance, the Department of Taxation, the Workers’ Compensation Commission, and the Office of the Attorney General.

The group will develop a work plan by November 1, 2018 and report to the Governor on its progress by August 1, 2019.

The full text of Executive Order Sixteen can be found here.