On February 1, 2010 President Obama released his FY 2010 federal budget. Included is a proposal, to be jointly administered by the Departments of Labor and the Treasury, to eliminate legal incentives for employers to misclassify their employees. The proposal sets aside funds to enhance the two agencies’ ability to penalize employers that misclassify employees as independent contractors, and restore protections to employees who have been misclassified. It also allocates $25 million to hire 100 new enforcement officials to target worker misclassification and establish competitive grants to encourage states to address this issue. According to the budget, this proposal will increase Treasury receipts by $7 billion over 10 years.
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