North Carolina Governor Signs Executive Order on Employee Misclassification

North Carolina Gov. Pat McCrory signed an executive order Dec. 18 designed to crack down on employee misclassification practices in North Carolina. McCrory said Executive Order 83 establishes the Employee Classification Section, a new office within the North Carolina Industrial Commission, to streamline information sharing and facilitate enforcement actions amongst cabinet agencies and the Council of State, according to a statement from the governor’s office.

“When unethical employers improperly classify their employees as independent contractors, they not only put our state’s workforce at risk, but also put ethical businesses at a competitive disadvantage and rob taxpayers of significant revenues,” said Governor McCrory. “The Employee Classification Section will work with other state agencies to ensure that every potential violation of our state’s laws will be thoroughly investigated.”

The executive order directs the chairman of the Industrial Commission to appoint a director to oversee the new section’s activities. The director will serve as the primary point of contact for reported instances of employee misclassification and will refer all reported instances to the relevant state agencies for investigation and enforcement action.

McCrory has directed the North Carolina Department of Revenue, the Industrial Commission, and the Division of Employment Security to each appoint a liaison who will work directly with the director to ensure that their respective agencies are taking proper enforcement actions and sharing all necessary information. The executive order also provides an opportunity for improved coordination and collaboration between the new Employee Classification Section and the Department of Labor and Department of Insurance, the governor’s office statement says.

The North Carolina Legislature took up the worker misclassification issue in the 2015 session, but failed to reach a compromise before the session ended. McCrory said he hopes to work with the General Assembly to “build upon our recent gains.”

“The creation of the Employee Classification Section is a significant first step in eliminating employee misclassification throughout our state,” McCrory said. “I’m proud to sign this Executive Order which reaffirms our state’s commitment to protecting its workers, businesses, and taxpayers.”