Employee misclassification task force asks for more time

The members of Louisiana’s Misclassification of Employees Task Force, who are researching employer payroll fraud, feel they will not be able to submit proposed legislation in time for state lawmakers’ regular session beginning April 12. 

At Wednesday’s meeting, the members agreed with task force Chairman Luke Morris when he suggested tabling their recommendations and asking for more time to continue with the task force, Louisiana Illuminator reports

Morris, who also serves as assistant secretary of the Louisiana Department of Revenue, said he would rather spend additional time on crafting an effective bill rather than proposing something that may not work. Several other members made similar statements.

The task force was created through a Louisiana Senate resolution passed at the end of the Louisiana Legislature’s  second session in October 2020. The resolution instructed the Department of Revenue to assemble a task force of experts to investigate the problem of businesses misclassifying their workers as independent contractors instead of employees, which lets employers avoid paying several payroll taxes to the state—namely unemployment, workers compensation and income taxes. 

When businesses illegally misclassify employees as independent contractors, it can lead to higher taxes on businesses that do follow the law.

In 2019, the Louisiana Legislative Auditor issued a report on more than 3,000 audits it conducted on misclassified employees. That report concluded that more than 13,000 misclassified workers had cost the state $3 million in unemployment taxes and $9 million in income taxes.

The task force, which has held weekly meetings since January, has focused on finding ways to bring businesses into the system without heavy-handed enforcement and penalties. They have so far drafted two amnesty-type recommendations. The first is a “safe harbor” provision that would protect a company in an audit situation if the company is found to have misclassified any of its workers. The other draft proposal is a “fresh start” bill that would create a program to incentivize companies to voluntarily reclassify their workers correctly by waiving any penalties or payments that would normally be owed. Read the full story from Louisiana Illuminator