PROVIDERS nor the DEPARTMENT of LICENSING consider what are the legal definitions of EMPLOYEES or INDEPENDENT CONTRACTORS under federal law or state law even though 12VAC35-105-150. states providers “MUST” comply with ALL APPLICABLE FEDERAL, STATE, LOCAL LAWS and/or REGULATIONS INCLUDING LAWS REGARDING EMPLOYMENT PRACTICES.

The PROVIDERS nor the DEPARTMENT of LICENSING know under federal law

1) that IRS Form SS-8 legally “MUST” be filed with the IRS at which time it will be legally determined whether or not that employer can legally employ workers as EMPLOYEES or INDEPENDENT CONTRACTORS before an employer hires individuals as independent contractors for the purposes of the Federal Insurance Contributions Act and the Federal Unemployment Tax Act and

2) The PROVIDERS nor the DEPARTMENT of LICENSING request that the  Virginia Unemployment Commission determine whether or not an individual should be legally classified as an employee or independent contractor which is discussed under the

§ 60.2-212.(C) of the Virginia Unemployment Act.

Our review of employee misclassification in Virginia found that: 

1. Employers who properly classify workers:

1. pay higher payroll costs and
2. may be less competitive in their respective industries. 

2. Several other states, the IRS, and the U.S. Government Accountability Office have found that misclassification can:

      a. impact government revenues as well as

      b. employers and workers.

3. Misclassified workers are often denied certain legal rights and benefits.   

4. A Virginia Employment Commission (VEC) audit of one percent of Virginia employers found:

       a. 5,639 workers were misclassified in 2010.

5. Based on estimates in other states, Virginia could have on the order of:

1.  40,000 misclassifying employers and
2. 214,000 misclassified workers.   

6. Worker misclassification:

1. lowers Virginia’s state income tax collections, leading to estimated foregone revenues on the order of $1 million for workers identified during VEC audits and
2. $28 million in total based on other states’ findings in 2010.