Sep 6, 2017

North Carolina Law Seeks to Coordinate Misclassification Investigations to Increase Enforcement

1099 Tax Form

On August 11, 2017, North Carolina Governor Roy Cooper signed into law the North Carolina Employee Fair Classification Act (the “Act”).  Effective on December 31, 2017, the Act creates the Employee Classification Section of the North Carolina Industrial Commission.  The Employee Classification Section will receive and investigate reports by employees alleging misclassification as independent contractors and share information with other state agencies as well as federal agencies such as the Wage and Hour Division of the United States Department of Labor.

The Act does not change the definitions of an “employer” or “employee” under any existing North Carolina law; but, employers will be required to post a notice in the workplace regarding employee classification, as well as how and where to report any misclassification claims.  This posting requirement may result in an increase in allegations of worker misclassification. Further, the Act’s information sharing procedures increases the likelihood of related state and/or federal investigations.  Before December 31, 2017, North Carolina employers should review and evaluate worker classifications.

If you have any questions or concerns on how this may impact your business practices or have any other questions please contact your labor and employment counsel at Smith, Gambrell & Russell.