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Governor Granholm Signs Executive Order on Misclassification
Updated On: Mar 08, 2008

Governor Granholm Signs Executive Order on Misclassification

Michigan Governor Jennifer Granholm today issued an Executive Order to stop employers from illegally classifying its workforce as independent contractors. Granholm's action will increase oversight over employers to assure that properly classified employees rights and benefits are protected. The order also created a task force to improve enforcement actions.

The Teamsters praised Granholm's actions since workers who are misclassified lose out on many benefits and protections of employment law. Some employers willfully mislabel workers as contractors to avoid payroll costs for withholding taxes and to avoid paying insurance premiums for unemployment or workers compensation policies.

"Governor Granholm is acting to protect Michigan's workers and to see that all employers live up to the laws to compete fairly," said Teamsters General President Jim Hoffa. "The Teamsters applaud Governor Granholm's leadership in addressing this illegal tax and employment scheme by scofflaw employers."

Michigan is the second state in the last six months to move to address this issue.  In September 2007, New York Governor Eliot Spitzer also issued an executive order to stop misclassification in that state.

Studies suggest that law-abiding employers and state governments are picking up the burden of the employers who misclassify employees. The state funds that provide unemployment and workers' compensation miss out on collecting the full donations of the scofflaw employers.
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