On June 26th 2014, Chapter 144 “An Act Restoring the Minimum Wage and Providing Unemployment Insurance Reforms,” was signed into Law. In addition to increasing the state’s minimum wage, the law also codified the Joint Task Force on the Underground Economy (JTF), making it a permanent fixture under the Executive Office of Labor and Workforce Development as the Council on the Underground Economy (CUE). The law ensures that government agencies work together in a concerted manner to uncover businesses that conceal or misrepresent their employee population to circumvent their employer responsibilities related to business laws and regulatory requirements.
The JTF, established by the Governor in 2008 under Executive Order 499, has to date commenced hundreds of investigations and collected millions of dollars in tax obligations, wage restitution, fines, and penalties from unscrupulous employers. With the enactment of this law, the agency partners that comprise the JTF will become a permanent compliance unit to combat the underground economy. The Council on the Underground Economy will continue Massachusetts’ work to level the playing field by bringing businesses and individuals into compliance with applicable state labor, licensing and tax laws. The law became effective March 24, 2015.
Since its inception, the JTF has grown to over 17 agencies including the Attorney General’s Office (AGO), Department of Revenue (DOR), Department of Unemployment Assistance (DUA), Department of Industrial Accidents (DIA) and Department of Labor Standards (DLS) and has collected more than $76 million from unlawful businesses by enforcing labor, licensing and tax laws. Task Force partners share information, and come together with a common purpose: to bring businesses and individuals into compliance with applicable state labor, licensing, and tax laws.
The JTF will continue to maintain a toll-free referral line, 1-877-96-LABOR, and online complaint system for businesses and individuals seeking information or to lodge complaints about suspected cases of fraud and misclassification.
Costs of the Underground Economy
Why tackle the underground economy? The underground economy and worker misclassification is not a new phenomenon or one which exists just in Massachusetts.
Most businesses are law-abiding and responsible, treat their employees fairly, and stand behind the goods and services they sell. These legitimate businesses often wind up paying higher costs when other businesses evade the law. Businesses in the underground economy pay workers sub-minimum wage or "off the books", illegally misclassifying their employees to avoid paying for unemployment or workers' compensation insurance and refusing to withhold taxes.
When the underground economy is allowed to flourish, workers are denied basic workplace rights and protections, legitimate businesses find they cannot compete and must shut down, consumers are subject to unregulated goods and unlicensed services and Massachusetts is cheated out of revenue that could otherwise fund worthy programs and services.