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How Being Paid Under the Table Hurts the Workforce
>>AMY SUSAN: Hi, I’m Amy Susan, Director of Communications for the Missouri Department of Labor. On this week’s edition of Labor Talk we’re here to discuss worker misclassification, also known as 1099 fraud. It’s a problem not only in our country, but in our state. In fact, it’s the most common form of wage theft. Every year thousands of Missourians are found to be a victim of misclassified workers and as Gracia Backer, Division Director, will explain, we’ll find out it’s just the tip of the iceberg of the ones that we discover. So, Gracia, can you tell us more about the 1099, or Worker Misclassification Campaign and what that is?
>>GRACIA BACKER: One of the first things that we did was try to develop a definition that was easy to understand for both employers and employees. Secondly, now we have to get the information out to those who are affected by it. So, one thing that we have done is sent a flyer out to all 137,000 employers--hopefully they received it--to let them know that this is what misclassification is about. This is what happens when fraud occurs. This is how you, as an employer, can be negatively affected and you, as an employee, can certainly be negative affect-negatively affected. And, most importantly, for those employers who are following the law and are doing things correctly then they want to make sure that those who are not know what's going on and they participate properly and that they follow the law because ultimately the good guys are going to pay for the bad guys.
>>SUSAN: What do you mean when you say 1099 fraud?
>>BACKER: It’s when a worker is not classified as an employee and if you’re not classified as an employee you don’t re-you don’t pay into Social Security; you-your employer is not paying into unemployment insurance for your benefits, should you be deemed eligible, and probably the employer’s not paying into Workers Comp, should you be hurt on the job as an employee. So, the employee is negatively affected and other employees, again, as I said before, that are following the law, are paying Workers Comp, are paying Unemployment Insurance Benefits into the trust fund and they--and then they are paying into Social Security, so, you know, it’s not an even playing field.
>>SUSAN: Now you, Gracia, being the Division Director of the Division of Employment Security, which is in charge of administering the state’s unemployment program, why is it so important to get this message out?
>>BACKER: This is a nationwide problem. It’s not just in the State of Missouri and it’s become more so in--in the past five or six years, so it’s very important that our employers know what they have to do. You know, ignorance of the law is no excuse but sometimes things are so technical and so detailed that people just--you just don’t know by assimilation. You have to--you have to be informed, so it’s very important that we have this on the websites, we have it in our Quarterly Contribution Wage Reports. We always talk about that. We did a special flyer to--to let employers know and, also, employees need to know. They need to--to take on that responsibility too. If they feel that they are not being reported correctly, they need to let us know and probably they need to let their employer know. The employer may not realize that, in fact, they are an employee and not a 1099. A 1099 is a--is a non-employee’s W-2. That--that’s basically what it is. A 1099 says this is what you earned. It’s not the same as a W-2 because a W-2 has all the reporting, you know, wages and for your Social Security etcetera, so a 1099 does not have that; it just has your wages, so there is no protection for you as an employee.
>>SUSAN: Tell us more about the 1099 Are You Off The Books website.
>>BACKER: We offer our services to come and visit with them. We would certainly appreciate if we had a big group. You know, we can’t hit every--every employer in the State of Missouri but we certainly will assist in any way possible and it also provides a little test that you can see if, in fact, you fit in one of these categories; if you’re in a gray area; if it’s really right out there that, no, this is a misclassified worker. So, it’s very, very helpful if employers take the time to look at it.
>>SUSAN: Now there are instances and legitimate instances of a gray area and it’s not so black and white, so what should an employer or a worker do if they find themselves in that situation?
>>BACKER: Certainly call us. I mean, nobody’s going to be punished for asking questions and that’s the best way to resolve a problem and we’ll be there to assist in any way possible.
>>SUSAN: Well, thank you again, Gracia, for talking to us today about the campaign and if you all have any other questions or are in need of more information you can visit labor.mo.gov/offthebooks.