Independent Contractor Misclassification and Subcontracting

Growing numbers of employers call their employees "independent contractors" and subcontract key functions to other companies in order to side-step responsibility for minimum wage and other worker protections.  Because U.S. employment and labor laws assign responsibility and rights to "employers" and "employees," employers seek to evade workplace rules through two devices: (1) they call their "employees" "independent contractors," and (2) they insert subcontractors between themselves and their employees.  When these tactics succeed, construction workers, day laborers, home health aides, janitors and many others find themselves without workplace protections.  

NELP is a leading expert on independent contractor evasions and improper use of subcontracting arrangements, and works with allies to end abuse of these rules, which harm workers, state and federal treasuries, and responsible employers alike.

  • At the federal level, NELP is working to promote federal bills aimed at independent contractor abuses.  Three separate pieces of federal legislation are pending, to strengthen the federal tax code's treatment of employers who misclassify workers as independent contractors and to create tighter recordkeeping rules.  NELP helped to strategize and develop these proposed policies, drawing on progress made at the state level to fight independent contractor abuses.

  • NELP researches and reports on state legislative, administrative and executive activity around the growing problem of independent contractor misclassification.  States are on the forefront of addressing this problem, by commissioning studies to document violations and losses to the state coffers, issuing Executive Orders that establish inter-agency task forces, and passing laws to close the loopholes.  NELP's Summary of State Independent Contractor Reforms is one recent example. 

  • NELP promotes state agency enforcement and private litigation aimed at subcontracting abuses by holding "joint employers" accountable for workplace standards violations.  NELP helps state agencies identify strategic practices and draft regulations to tighten definitions of responsible employers.  NELP also engages in direct litigation and amicus and appellate support in wage-and-hour joint employer cases, including recent circuit cases to find joint employer liability in the Second, Seventh, and Ninth Circuits. 

  • NELP's Subcontracted Work Initiative brought together unions, academics and practitioners from a wide variety of job sectors for two national conferences to study the mechanisms of subcontracting in garment, agriculture, janitorial, hospitality, health care and other jobs, and generated a report with policy recommendations for reform. 

See also our work in the area of Government Enforcement of Workplace Rights and Litigation.

For more information on our work in this area, please contact Cathy Ruckelshaus, cruckelshaus@nelp.org.

Other Key Resources:

National Alliance for Fair Contracting

United Brotherhood of Carpenters