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The North Carolina Worker Misclassification Law is Now in Effect

February 8, 2018

North Carolina Employee Fair Classification Act

As of December 31, 2017, The North Carolina Employee Fair Classification Act (EFCA) is in place. This law allows workers to more easily report employers that misclassify workers as independent contractors instead of employees.

Employee misclassification has been an ongoing issue for some time now. Workers that are classified as employees are given definite protections under the law when it comes to issues such as wages, overtime pay, benefits, equal opportunities, and workplace injuries. Unfortunately, these types of securities don’t always apply to independent contractors, and there are many businesses out there that misclassify employees as independent contractors to avoid paying certain state and federal taxes. As a result, state and federal agencies have responded with further investigation into issues of misclassification. The EFCA is a giant step in the right direction to help with this trend.

The EFCA creates a new division of the North Carolina Industrial Commission called the Employee Classification Section (ECS), which investigates reports of worker misclassification and helps North Carolina agencies get the money they’re owed. The act also assists agencies in prosecuting employers that continue to evade paying penalties even after they’re caught. This law additionally requires employers to post a notice at their workplaces to inform workers that they should be classified as employees unless they are recognized legally as independent contractors. If they’re incorrectly classified, they have the right report the issue to the ECS. Finally, employers are obligated to certify that they have read and understand the ECS notice that defines employee misclassification and agree to any investigations into misclassification and outcomes, should such an issue arise. Any businesses that object can have their license, permit, or certification application denied. Each misclassification investigation will be handled on a case-by-case basis because different tests are used for determining who is an employee versus who qualifies as an independent contractor.

When it comes to workers’ compensation, our lawyers want to ensure your employment is classified correctly and able to receive full benefits should an accident occur. If you’re being misclassified at work, contact us immediately. We’re ready to fight your rights and prove where you stand with your employer.