On August 22, 2012, Governor 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 enhance coordination and communication among various state agencies,” and “to identify effective mechanisms to combat unlawful practices like employee misclassification that harm workers.” The Task Force will be chaired by the Commissioner of Insurance and include heads of various state agencies, or their designees, and representatives of other entities with expertise on these issues, such as the Commissioner of Labor.

Of particular significance to North Carolina companies who use independent contractors, Governor Purdue directed the Task Force to “[i]dentify sectors of the economy where misclassification occurs most frequently” and “[i]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.

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.