In order to protect the health of the Commonwealth’s economy, its workers and its businesses, the Executive Office of Labor and Workforce Development (EOLWD)/ Joint Task Force on the Underground Economy and Employee Misclassification (JTF), has engaged two consultants to work with EOLWD to spearhead a research study to be conducted by the Department of Revenue (DOR) on the state of employment fraud and employee misclassification in Massachusetts.  DOR, as a member of the JTF, has contracted with Revenue Solutions, Inc. (RSI) to have an analysis conducted to provide the best estimate possible of the frequency of employee misclassification and underground economy activity in the Commonwealth by industry category. 

The study will result in a description of the current degree and volume of employee misclassification in Massachusetts.  The study will also include an analysis of the fiscal impact caused by employee misclassification on state tax revenues and the unemployment insurance tax system.  This aggregate analysis will be used by the JTF to improve estimates of the scope of the problem and the impact to the Commonwealth.  The findings of the JTF research study will subsequently help shape the JTF’s direction to various Commonwealth agencies in addressing this problem.

EOLWD sought to engage a contractor with considerable professional experience administering and developing research related to the economy and workplace issues; and knowledge, experience, and demonstrated proven results in producing research studies and comment on related topics.  Upon the issuance of the study’s findings, the contractor will present to EOLWD an independent review and report of the study’s findings. 

EOLWD has contracted with David Weil, Ph.D., and James Rebitzer, Ph.D., who, combined, have over 30 years of experience in administering, developing, performing, publishing, and presenting research related to the economy and workplace issues. 

David Weil received his Ph.D. in public policy in 1987 from Harvard University.  He has authored and co-authored four books and has published over 80 articles and publications in a variety of refereed economics, public policy, management, and industrial relations journals and books, as well as numerous publications in non-academic outlets.  His recent work has focused on how the restructuring of businesses in many industries—the “fissuring of the workplace”—has increased problems of non-compliance with labor standards, raised health and safety hazards in many workplaces, and contributed to wage stagnation.  Dr. Weil is a Professor of Economics and Everett W. Lord Distinguished Faculty Scholar at Boston University School of Management.  He also serves as co-Director of the Transparency Policy Project at Harvard’s Kennedy School of Government.

James Rebitzer received his Ph.D in economics in 1986 at the University of Massachusetts at Amherst.  His doctoral dissertation concerned the relationship between unemployment and firm personnel practices.  Since that time he has published more than 35 refereed articles and book chapters, all of which concern some aspect of workplace personnel practices or labor market outcomes.   Dr. Rebitzer has a long familiarity with labor market and workplace issues in Massachusetts, acquired from his Ph.D. training at UMass Amhert and in part from his 10 years teaching human resources management at MIT’s Sloan School of Management.  He is Professor and Chair of Markets, Public Policy & Law Department at the Boston University School of Management.

EOLWD Secretary Joanne Goldstein elected to fund the study with monies received as a result of a settled lawsuit against FedEx for misclassification of employees.  In July of 2010, Massachusetts (through the Attorney General’s Office) entered into a multimillion dollar agreement with FedEx Ground to settle the claim that the company misclassified its drivers as independent contractors. FedEx Ground agreed to pay $3.05 million to Massachusetts’ general fund to settle the claim.  EOLWD was given a portion of that settlement money to put toward efforts to thwart the underground economy.

The study participants had a project kickoff meeting on Wednesday, December 5th.  The study is expected to take 12 months to complete.