For far too long, employers have taken a laissez-faire approach to classifying workers as independent contractors in order to help control costs, streamline their organizations, and honor the stated preferences of their workers. However, the cost associated with being undisciplined and incorrect about these classification decisions can be quite expensive, and is likely to get more expensive in the near future given the Department of Labor's "Misclassification Initiative," which is designed to identify and reduce employee misclassification. In fact, the Department of Labor has requested a specific $25 million line item in its 2011 budget to hire additional investigators and enforcement personnel, as well as to create competitive grants to encourage state agencies to focus more attention on this issue. This should come as no surprise in these lean tax-revenue years given that the General Accounting Office recently estimated a loss of more than $2.7 billion per year in unpaid Social Security, unemployment and income tax as a result of this type of misclassification.

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