Home > Workmens Compensation > Audit criticizes Missouri Department of Labor procedures

Audit criticizes Missouri Department of Labor procedures

By Brian R. Hook

Noting the Missouri Department of Labor and Industrial Relations ranks among the lowest in the nation at identifying misclassified workers, an audit criticizes the department for its investigation procedures.

Misclassified workers negatively impact state government revenue through lost income taxes, lost unemployment taxes, and lost workers’ compensation taxes, according to the audit report released Tuesday by the office of Missouri Auditor Susan Montee.

The Missouri Department of Labor ranks 50 out of 51 state labor agencies in the nation, including the District of Columbia, in misclassified worker audit effectiveness from 2005 to 2009, according to the U.S. Department of Labor, the audit concludes.

“This low performance is primarily a result of the lack of a targeted audit selection,” the auditor writes in an introductory letter.

The Missouri Department of Labor can improve its effectiveness by continuing to refine its audit selection process, implementing follow-up audits of significant offenders, and developing its system to more effectively utilize Internal Revenue Service data, according to the audit.

An increase in audit effectiveness would result in significant increases in unemployment contributions and taxable wages, according to the audit report. If Missouri matched the effectiveness of the national average of 1.36 misclassified workers identified per audit, taxable wages reported would increase an estimated $38 million annually and the increase to the unemployment compensation trust fund would increase by $800,000.

The scope of the audit to evaluate the processes for investigating misclassified workers by the Missouri Department of Labor included, but was not necessarily limited to, the fiscal year ended June 30, 2010.

Article originated on watchdog.org, Oct. 6, 2010

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Categories: Workmens Compensation
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