Converting the Uninsured - A New Reason for Challenging Independent Contractors

Posted 10:06 AM by Michael Fox

The economic benefits to an employer of classifying an individual as an independent contractor rather than an employee are so strong that employers are often willing to test what is at best a murky boundary. More and more they are finding government agencies willing to take them to task. The state of Hawaii has undertaken a new initiative to make sure that such classifications are legitimate, with a unique reason -- to decrease the number of individuals without health insurance. According to the Pacific News story, State looks hard at 'independent contractors', a study by the Hawaii Institute of Public Affairs estimated 1 out of 4 of the uninsured are actually eligible for insurance if they were not misclassified by their employers.

Although the numbers strike someone with no knowledge of the actual facts as somewhat suspect, it has motivated the Labor Department of Hawaii to initiate the crackdown. One big step was a ruling against Manawa Lea Health Services Inc. of Honolulu, which is one of about 50 companies that provide services for the elderly and disabled using primarily part-time and on call workers.

The issue is interesting enough that a number of my professional colleagues, members of the Management Labor and Employment Roundtable, will be convening in Hawaii later this week to study the matter in depth. Well, maybe there are other reasons!

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