Maine Employment Lawyer Blog

Many employers in Maine and across the country engage in the practice of misclassifying employees as independent contractors. Misclassification is sometimes called "1099'ing" because of the 1099 tax form independent contractors receive instead of a W-2 form. While misclassification is illegal, it can save employers as much as 30% in payroll and related taxes that they would have to pay if they correctly classified their workers as employees. Employees who are misclassified as independent contractors can miss out on workers compensation insurance, unemployment insurance, fair pay, and other workplace protections.

The National Employment Law Project (NELP) has published a report which identifies the steps various states have taken in the past year to combat the problem of misclassification. The report identifies a new section of Maine's Workers Compensation Act which sets special rules for when employers can classify workers in the trucking and messenger service industries as independent contractors. Under this statute, workers in these industries are presumed to be employees and employers can only classify them as independent contractors if they can satisfy specific criteria. To illustrate, under this statute, if a worker is not covered by his employer's workers compensation insurance, and he does not own or lease the vehicle he uses for work, his employer cannot classify him as an independent contractor.

In addition to legislative action, the NELP report identifies some states that have stepped up enforcement of laws already on the books. For instance, in the past year, Massachusetts' Joint Task Force on the Underground Economy and Employee Misclassification has recovered nearly $6.5 million through its enforcement efforts--which included $2 million in unpaid unemployment insurance taxes. Recently, there have been reports of rising unemployment insurance tax rates in Maine. Increased enforcement actions against employers who misclassify their workers as independent contractors could help eliminate the need to raise these tax rates. If employers who are violating the law are forced to pay the taxes that the law requires them to pay, the rates can be lower for all employers.

If you believe that your employer has misclassified you as an independent contractor, you should contact an experienced employment attorney for advice.

The American Jobs Act, a bill that President Obama is urging Congress to pass, would prohibit certain employers from discriminating against unemployed applicants. Under the American Jobs Act, it would be an "unlawful employment practice" if a business with 15 or more employees refused to hire a person "because of the individual's status as unemployed." Detractors of the bill argue that it will open the door to "nuisance lawsuits." Supporters of the bill hail the protections against unemployment discrimination as a common sense way to protect people who have been unemployed a long time due to no fault of their own from unfair discrimination.

The District of Columbia and Chicago are also considering passing laws that prohibit unemployment discrimination. New Jersey Governor Chris Christie signed a similar bill into law earlier this year that prohibits employers from posting job advertisements which state that unemployed people may not apply.

Currently, it is legal for an employer to refuse to hire anyone who is unemployed. Obviously, if this practice becomes widespread, the current high unemployment rate would remain high for much longer. A Congressman from Georgia believes this is unfair and he has proposed legislation to make it illegal. Under the Congressman's bill, The Fair Employment Act of 2011 (H.R. 1113), the same federal law that protects job applicants from religious discrimination, race discrimination, and sex discrimination would also protect applicants from discrimination on the basis of their employment status.

This bill comes on the heels of claims that discrimination against the jobless is a covert way of discriminating against the aged and racial minorities. Older workers and racial minorities were particularly hard hit during the recession. Thus, if an employer refuses to hire an unemployed applicant, it is more likely that it will not hire an older worker or a racial minority.

On June 17, 2010, a minority of the U.S. Senate blocked passage of a bill that would have extended unemployment compensation benefits for unemployed Mainers and others around the nation. The extension of unemployment benefits is one provision in a larger bill intended to help create and protect jobs. The opponents of the legislation, which include Senators Snowe and Collins, contend that the bill is too costly and would add to the deficit.

In a bill approved by the House on September 22, 2009, more than a million people could receive an additional 13 weeks of unemployment benefits. The bill would extend benefits to people living in states with unemployment rates higher than 8.5%. Maine's unemployment rate was 8.6% in August.

If you've lost your job, unemployment benefits may not be the only remedy available to you. Sometimes an employer violates an employee's rights when it terminates him or her. If you think your rights have been violated, you should contact a lawyer who specializes in representing employees whose rights have been violated.