North Carolina forms task force on worker misclassification

by Julie K. Adams, Esq., Littler Mendelson, Charlotte

On Aug. 22, 2012, Gov. Beverly Perdue issued Executive Order 125 establishing a task force to address concerns that North Carolina em­­ployers are allegedly misclassifying employees as independent contractors to avoid obligations under federal and state laws, including laws governing wage-and-hour issues.

According to the order, the primary purposes of the “Task Force on Employee Misclassification” are to:

   “nhance coordination and communication among various state agencies”

   “dentify effective mechanisms to combat unlawful practices like employee misclassification that harm workers.”

Seeking more complaints

The task force will be chaired by the North Carolina Commissioner of Insurance and include heads of various state agencies, as well as representatives of other entities with expertise on these issues, such as the state’s Commissioner of Labor.

Of particular significance to North Carolina companies that use independent contractors, Perdue directed the task force to “dentify sectors of the economy where misclassification occurs most frequently” and “dentify ways to increase the filing of complaints by employees and other members of the public against noncompliant employers.”

One goal of the task force is to “utilize a cooperative approach in working with employers and community groups” in an effort “to reduce the prevalence of employee misclassification” through the promotion of education materials explaining the distinction between employees and independent contractors, and raising public awareness of the problems arising from misclassification.

Legal changes on the way?

The panel will also consider changes to North Carolina laws and regulations and work with state and local investigators and prosecutors to en­­hance enforcement and develop procedures to ensure that “appropriate” misclassification cases are referred for criminal prosecution.

Reports regarding the task force’s activities, including summaries of the panel’s accomplishments and proposed legislative and regulatory changes are due to the governor every six months.


Julie K. Adams represents employers in all areas of employment law and has litigated a broad range of employment matters. Contact her at (704) 972-7000 or

What the new misclassification task force will do

North Carolina Executive Order 125 establishes a task force that will examine the problem of worker misclassification—that is, incorrectly treating workers as independent contractors when they should be classified as employees.

In addition to protecting employee rights, the task force is charged with:

  • Eliminating the competitive advantage businesses gain when they misclassify workers
  • Educating employers and employees about the law on employee misclassification.

Among the task force’s duties under the executive order:

  • Identifying those sectors of the economy where employee misclassification occurs most frequently and eradicating the problem within those industries
  • Creating educational materials explaining the distinction between employees and independent contractors and raising public awareness of the problem
  • Determining regulatory or legislative changes that will make it easier for North Carolina authorities to enforce the law on employee misclassification
  • Identifying ways to encourage employees to file misclassification complaints against noncompliant employers, including making it easier to do so
  • Assessing the state’s current investigative and enforcement methods for preventing employee misclassification, and developing new methods
  • Soliciting assistance from law enforcement agencies and district attorneys to refer misclassification cases for prosecution.