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Governor Terry McAuliffe has signed Executive Order 24 establishing an interagency task force on worker misclassification and payroll fraud.
“Every Virginian who works hard and follows the rules should get the pay and benefits that they deserve,” said Governor McAuliffe “This executive order will begin a process to ensure that employers throughout the Commonwealth follow the same rules when it comes to benefits and pay for their employees.”
The text of executive order number 24 is as follows:
NUMBER TWENTY FOUR (2014)
ESTABLISHING AN INTER-AGENCY TASK FORCE ON
WORKER MISCLASSIFICATION AND PAYROLL FRAUD
Importance of the Issue
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.
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 up to 40%, placing other employers at a competitive disadvantage.
Based on state and national studies, JLARC estimated that worker misclassification lowers Virginia’s state income tax collections as much as $28 million a year. Agencies with relevant enforcement responsibilities, including the Virginia Employment Commission, 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, and the Workers’ Compensation Commission each address only one component of this practice and may not fully coordinate their efforts. In its study, JLARC recommended the establishment of a task force with representatives from the agencies listed above.
Establishment of the Task Force
Pursuant to the authority vested in me as Governor under Article V of the Constitution of Virginia, and the Code of Virginia, in order to examine the issue of worker misclassification and payroll fraud, I hereby create an Inter-Agency Taskforce on Worker Misclassification and Payroll Fraud (the “Taskforce”).
The purpose of the Taskforce is to develop and implement a comprehensive plan with measureable goals to reduce worker misclassification and payroll fraud in Virginia. The activities of the Taskforce should include, but not be limited to:
1. Review statutes and regulations related to worker misclassification and payroll fraud;
2. Evaluate current enforcement practices of the agencies involved;
3. Develop procedures for more effective inter-agency cooperation and joint enforcement;
4. Implement a pilot project for joint enforcement;
5. Develop educational materials and an outreach strategy for employers;
6. Advise on any technological improvements in worker misclassification and payroll fraud detection; and,
7. Recommend any appropriate changes to relevant legislation or administrative rules.
The Taskforce will be chaired by the Secretary of Commerce and Trade and will include representatives from the Virginia Employment Commission, 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, and the Workers’ Compensation Commission.
A workplan will be developed and a report on the progress of the Taskforce will be presented to the Governor by .
Staff necessary for the Task Force will be provided by the respective agencies participating with the Task Force. The estimated direct cost of the Task Force is $1,000. Funding necessary to support the Task Force will be provided from funds authorized by § 2.2-135 of the Code of Virginia.
This Executive Order shall be effective upon its signing and, pursuant to §§ 2.2-134 and 2.2-135 of the Code of Virginia, shall remain in full force and effect for a year from its signing or until superseded or rescinded.
Given under my hand and under the Seal of the Commonwealth of Virginia this 14th day of August, 2014.
Terence R. McAuliffe, Governor
Levar M. Stoney, Secretary of the Commonwealth
Our Notes: Expect increases in abuses, not less fraud.