April 17, 2008

(Washington) –Teamsters General President Jim Hoffa today said the union strongly supports the Taxpayer Responsibility Accountability and Consistency Act, which was filed on April 15.   

The bill would close a loophole that allows employers to avoid paying Social Security and Medicare taxes, withholding income taxes and contributing to workers’ compensation and unemployment insurance.

Companies escape those responsibilities by misclassifying their employees as “independent contractors.”

“This epidemic of misclassification hurts responsible employers who pay their taxes, provide health insurance and respect their workers’ right to join a union,” Hoffa said.

“It’s time to level the playing field so that law-abiding companies aren’t at a competitive disadvantage to companies that cut corners by misclassifying their employees,” Hoffa said. “I urge Congress to pass this important bill soon.”

As many as 30 percent of all employers misclassify their employees as “independent contractors,” according to the U.S. Department of Labor. 

Nearly 2 million workers were found to be misclassified in just four states that recently studied the problem: Illinois, Maine, Massachusetts and New York.

The bill, HR 5804, is sponsored by Reps. Jim McDermott, D-Wash., John Tierney, D-Mass., and Richard Neal, D-Mass.

The bill removes the loophole that allows businesses to bypass the Internal Revenue Service’s test of whether a workers is an employee or an independent contractor. It also would require businesses to give the IRS information about large payments to independent contractors. 

Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women in the United States, Canada and Puerto Rico.