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AP News

Governor forms panel on NC business scofflaws

RALEIGH, N.C. (AP) — Gov. Beverly Perdue created a panel Wednesday to find ways to crack down on businesses that are skirting North Carolina law on workers' compensation insurance or taxes and gaining a competitive advantage to acquire work and earn profits.

Perdue issued an executive order forming a task force comprised of representatives of several state agencies and outside groups to look at the issue of employee misclassification. That's when a business illegally labels workers as independent contractors to avoid the extra expenses associated with permanent employees.

The task force, to be led by state Insurance Commissioner Wayne Goodwin, will identify potential legislation and easier methods for employees and the public to report potential violations.

The executive order follows a series of articles by The News & Observer of Raleigh that highlighted tax and insurance schemes, particularly in the construction, trucking and home health care industries, that allowed some to avoid extra expenses otherwise required by law.

Agencies also do a poor job communicating with each other to identify potential violators and sharing information that could help determine whether firms are operating legally, the newspaper reported. Perdue's office said one task force goal is to improve coordination and communication between state agencies.

"We must make sure that all facets of state government work together cooperatively," Perdue said in a statement. "I am expecting this task force to cut through any red tape and make any recommendations needed to protect workers."

The News & Observer highlighted a practice of obtaining "ghost policies" in which companies buy inadequate workers' compensation insurance that sometimes means injured workers struggle to get medical care. The newspaper also reported in April that least 30,000 businesses required to carry workers' compensation insurance don't do so.

The task force is supposed to submit reports every six months about its progress, including proposed legislative and regulatory reforms and any obstacles to completing them. The first report would appear be due in early 2013, after Perdue leaves office, meaning it will show up on the desk of her successor. The executive order would remain in effect for four years, or until it's rescinded.

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