Misclassification of workers transfers costs from employers, to the taxpayers and other businesses. During these unprecedented times with the COVID-19 virus, we see another cost shifting burden emerge. When employees are wrongly classified as independent contractors, and work dries up because of a health emergency such as COVID-19, unemployment benefits are unavailable to those workers. How will their bills be paid? Where will they find replacement income with almost every industry laying off and furloughing workers? It is not likely that the income will be replaced or the bills be paid. This then causes a ripple effect, in that when bills are not paid to landlords, mortgage companies, utility companies and the like, those businesses suffer losses as well. It is not likely that those businesses will be able to recoup the losses, resulting in a shift of the costs to business. Just to eat and sustain themselves, misclassified workers will resort to public aid, such as section 8 housing, Medicaid and other welfare programs. In the meantime, the original would be employer of the misclassified worker escapes costs but profited from the work performed. Here is another reason why “Handy” legislation and the like are poor laws that spread costs to those who did not profit from the work while allowing those who did profit, avoid the employment costs.
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