We hope this hasn't slipped under your radar but the federal budget for Fiscal Year 2013 has allocated a $14 million increase to the Department of Labor budget, and in the form of grants to states to help in identifying misclassified workers, recover unpaid taxes, and boost enforcement measures.

These additional funds are for the express purpose of detecting and discouraging the misclassification of workers as independent contractors. The breakdown of the enforcement increase is as follows:

$14 million to combat misclassification further broken down as $10 million for grants to individual states to identify misclassification and recover unpaid taxes and $4 million for personnel at the Wage and Hour Division to investigate misclassification.

In particular, note the coordination with state level regulators. This has been increasing and becoming ever more effective at finding and fining employers who misclassify their workers. If you are a subscriber to the TIR Answer Center then look for upcoming articles outlining exactly which states are most active and how in terms of enforcement and compliance.