Point of View

Making workplace law work well

September 9, 2012 

Vulnerable workers and honest business owners pay a heavy toll to the unscrupulous because government can’t seem to get its law, technology and resources around those in the marketplace who violate the law for profit.

The N&O’s recent series on “Ghost Workers” in North Carolina highlighted what some have stooped to and how it costs so many. There are other problems as well.

When you are an employee and don’t get paid for work, it’s called wage theft. It happens every day in North Carolina. Some employers, when asked by the state Labor Department about the issue, claim that the employee was an independent contractor and thus not protected by our wage and hour laws. Resolving that question is time-consuming, and the delay helps those who can afford to stall an agency overrun with complaints.

A wage thief’s odds are improved by the lack of shared data between enforcement agencies, the employee’s lack of knowledge about the misclassification and investigations whose cost often exceeding the pay at issue. Often the employee is directed to sue in an unfamiliar small claims court and face the boss alone.

Many who have been injured on the job will also find out that, unknown to them, their boss has illegally claimed them as independent contractors, making benefits under the Workers’ Compensation Act unavailable for desperately needed treatment and medication. Some employers don’t even bother with the ruse and buy “ghost” insurance policies that insure no one.

Some North Carolinians who get laid off discover that because they have been deemed independent contractors by their employers, they will not be eligible to receive unemployment benefits without the delay, expense and uncertainty associated with an appeal.


When our ability to oversee is overrun, how do we stop those who seek unfair advantage and profit at a terrible price to others? We must change to the law to:

• Presume that a worker is an employee unless the employer proves otherwise.

•  Require the employer to tell workers the employer’s name, address and employer ID number, and whether the workers are considered employees or independent contractors.

•  Ban “ghost” insurance coverage.

•  Demand complete investigation of wage theft allegations and budget the Department of Labor much-needed resources to adequately investigate misclassification.

•  Give workers denied unemployment benefits because they have been classified as independent contractors information about what they must show in order to appeal the denial.

•  Force the state Departments of Commerce, Revenue and Labor to immediately share data and harmonize identifications numbers and definitions.

Years ago our state tried to use the frequency of Workers’ Comp injuries to identify the most unsafe work places for priority OSHA inspections rather than wait for tragedy. While trying to harmonize three different agencies’ data lodged in their own proprietary databases, we found different descriptors of cases, workers, injuries, companies and job duties. There was no consistent rule as to when the data were entered.


To top it off, the three computer systems could not “talk” to one another and merge data. We ended up having to hand tabulate and merge the data. That probably has not changed.

Rather than the Big Brother government once feared, we now risk the reality and cost of being the big, expensive, stupid “brother” who cannot remember our name or where we live or work. Government agencies stumble around North Carolina, investigating when there are complaints, inspecting things by habit and filling out forms.

The goal must be a state government that recognizes employers and workers in one core database and adopts common definitions. That would allow fair and efficient enforcement of the employer/employee law and the identification of bad actors, whether they own the business or work there. With a clear picture of the marketplace, we could keep it fair for all.

Harry Payne is senior counsel for policy and law at the N.C. Justice Center. He is a former state labor commissioner and former chairman of the Employment Security Commission.

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