Department of Labor and Industry Misclassifications Policy


Authored by summer clerk Thomas O’Dea

The Virginia Department of Labor and Industry recently issued a new policy making construction employers responsible for providing proof of its’ subcontractors’ contractor licenses upon request. Under this policy, all workers on a job site will be characterized as either employees or independent contractors. If they are subcontractors, the contractor must be able to furnish proof of their licensure. Virginia Occupational Safety and Health Compliance (VOSH) inspectors will be enforcing this new policy during periodic workplace inspections. Noncompliance with this classification matrix can result in an array of punishments from several agencies.

First, if the inspector finds that the employer has misclassified employees, he can issue a citation, which can result in fines against the employer of up to $7,000.00 per misclassified worker. Failing to remedy the violation can result in an additional $7000.00 fine per violation, per day.

Second, the inspector can refer both the employer and the workers to the Department of Professional and Occupational Regulation (DPOR). DPOR can assess an unlicensed subcontractor a $500.00 fine for each day that he worked on the job site as well as charge him with a Class 1 Misdemeanor which can carry a penalty of up to 12-months in jail and an additional $2,500.00 fine. A construction employer who fails to remedy the license violations may be subject to license revocation.

Finally, a noncompliant employer can be referred to the Virginia Employment Commission (VEC) and/or the Virginia Workers’ Compensation Commission (VWCC) for audits of its employment practices. Negative findings can be punished as criminal offenses and are classified as Class 1 Misdemeanors carrying the same penalty described above.

As an example of this enforcement structure, an employer who has three misclassified workers on a job site may initially face $21,000.00 in fines from VOSH and audits by the VEC and VWCC, which could result in an additional $15,000.00 in fines and up to 6 years in jail. The workers may face up to $3000.00 in fines and up to 12-months in jail for each day they worked on the job site without a license.

In essence, all workers must be employees or subcontractors. If they are subcontractors, they need to have contractor licenses. If the employer fails to provide proof of such licensure to a VOSH inspector, there can be significant consequences from VOSH, DPOR, VEC, and/or VWCC.

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