How some employers skirt paying benefits

When is an employee not an employee?

The U.S. Labor Department is cracking down on businesses that call their workers "independent contractors" in order to deny them wages or benefits.

This issue historically is linked to low-paying jobs, and now, as CBS News correspondent John Blackstone reported, it's hitting the middle class.

For seven years Dutch Prior has taken pride in being a truck driver.

Last year, he signed on with a company called Shippers Transport Express. Although he drives their trucks, Shippers Transport calls Prior an independent contractor - not an employee.

"I'm not classified as an employee," Prior said. "I'm classified as an independent contractor, but I have very, very little control over the success or failure of my company."

Despite his so-called independence, Prior works exclusively for Shippers Transport, which doles out his daily routes. He has seen his paychecks dwindle, and he has none of the protections he would get as an employee.

"As long as we are independent contractors (the company) doesn't have to cover benefits, they don't have to cover sick days, bereavement leave time, holiday pay. It just saves the company money."

When Blackstone said it sounds like a good idea for the company and not for Prior, Prior said, "No, it's not a good deal for us."

Critics call the practice misclassification, and it's become a top priority for the Labor Department under the Obama administration. In 2011, the department collected more than $5 million in back wages on behalf of about 7,800 employees who had been misclassified - a 500 percent increase over the amount collected in 2008. They have hired 300 additional investigators to probe complaints.

Labor Secretary Hilda Solis said the department knows it's a big problem. Solis says this hurts more than just employees. That's because companies that misclassify workers avoid paying taxes and such benefits as workers' compensation.

"These have astronomical impacts on local governments, state governments and federal government and also hurts good, legitimate businesses that are playing by the rules and for employees that are being ripped off," she said.

Shippers Transport did not respond to CBS News' request for a comment, but Bob Digges, of the American Trucking Association, says many truckers choose to be independent contractors, instead of employees.

"Trucking companies are not misclassifying workers, Digges said.

But his defense of trucking companies faltered a bit with a slip of the tongue. Digges said, "They believe they get a more productive employee - excuse me a more effective worker - a worker who is efficient, who has some skin in the game."

As for Prior, he says he just wants to be treated fairly and that is important enough to put his job at risk.

When asked by Blackstone if he could be fired for talking to CBS News, Prior replied, "I don't know. I honestly don't know, and I'm going to find out when this airs. My grandfather told me you stand for something or you fall for anything, so this is me standing up for what I believe in."

Comments