The U.S. Department of Labor on Monday awarded $10.2 million to nearly two dozen states to beef up enforcement of a labor scheme that companies employ to evade their tax obligations.
The announcement of the first-of-their-kind grants comes one week after McClatchy’s five-part series that uncovered the federal government’s failure to stop companies that wrongly classify their workers as independent contractors instead of employees on federal contracts.
Labor Secretary Tom Perez said the grants, which range from $28,000 to $1.3 million, will help states identify and stop so-called worker misclassification and protect state unemployment insurance benefits.
“This is one of many actions the department is taking to help level the playing field for employers while ensuring workers receive appropriate rights and protections,” Perez said in a statement.
McClatchy reported that the federal government allowed companies on federal contracts to get away with not paying state and federal taxes by wrongly classifying workers as independent contractors.
Honest business owners were unable to compete with the bad actors, who could save more than 20 percent in labor costs. Their workers were left without labor protections and often were denied overtime and workers compensation.