Contractor Compliance: Penalties for Misclassification of
Employees
Issue: Defending Workers & Families
Target Level of Office: Local
Policy Origin: City of Omaha’s Human Rights and Resources Department, Nebraska
Link: www.YEONetwork.org/2013policy/?i=199
Summary Narrative of the Policy: Under its contracting provisions, the City of Omaha
outlines contract compliance enforced by the Human Rights and Resources Department.
Specifically, the city requires all potential contractors to file, as part of bid documents, contract
employment reports such as information on employment practices, policies, programs and
statistics of the contractor. Specifically, contractors must abide by Nebraska’s Misclassification
of Employees laws or Nebraska’s Fair Labor Standards laws, otherwise they are subject to fines
and up to six months in jail.
Relevant Talking Points & Important Information:
• According to the U.S. Department of Labor, the misclassification of employees as
something other than employees, such as independent contractors, presents a serious
problem for affected employees, employers, and to the entire American economy.
Misclassified employees are often denied access to critical benefits and protections to
which they are entitled, such as family and medical leave, overtime, minimum wage, and
unemployment insurance.
• In addition to these workplace protection losses, misclassified employees also lose, the
right to join a union, face an increased tax burden, often suffer from wage theft, and may
have no recourse for workplace injury violations and disability-related disputes.
• Misclassification is an increasing trend and often a cost-cutting measure taken on by the
employer. It is, in fact, a tax dodge because it causes federal, state, and local governments
to suffer revenue losses. Additionally, employers may misclassify workers as a way to
circumvent workplace civil rights including prohibitions of employment discrimination
based on age, race, gender, or disability.
20
Local Level
Policy
2014 Book