False Claims Reform Act
Price gouging by military contractors triggered the drafting and passing of the False Claims Reform Act. This was in 1986. The legislation provided the federal government more power and tools to recover losses due to fraud against the government. The False Claims Reform Act amended the Qui Tam and provides greater financial incentives and legal protection to private citizens who, with the help of discrimination attorneys, bring suits on behalf of the government. These private individuals are commonly referred to as “whistleblowers”.
A Potential Area of Abuse
A recent trend in qui tam is in the area of mortgage and financial fraud. The stage for fraud is set when you combine the recent downturn in the economy with the deep involvement of the government in the mortgage and financial markets. We are seeing an increase in mortgage fraud and financial fraud.
The government saw the need to rescue the economy. In response, the government has invested in a number of high cost strategies. These strategies included the buying up of troubled assets from financial institutions. These assets added up to billions. The Federal Housing Administration (FHA) provides mortgage insurance to lenders for more than 30% of all home mortgages. For the lender, mortgage insurance takes the risk out of the homeowner defaulting on their mortgage. As a result, some lenders have behaved badly.
A Response to the Abuse
In 2009, The Fraud Enforcement and Recovery Act expands the ability to report and recover fraud to the mortgage industry and housing industry. The scope of the mortgage and housing fraud is broad. Some examples of fraudulent behavior include falsification of loan documents, false appraisals and sham transactions using straw purchasers. The number of whistleblowers who have went to discrimination attorneys to report fraud in these areas has been on the rise. With increasing foreclosure rates, along with government involvement and money, potential fraud involving government funds is high. This is bound to result in continued increases in Qui Tam litigation.
What Can I Do?
As any New York discrimination attorney will tell you, under Federal law you and your job are protected for reporting fraud. You can also help hardworking taxpayers from being ripped off by corporate greed and dishonest business practices.
Your discrimination attorneys may also tell you that if you are aware of large scale fraud against the government, your reward could be in the millions of dollars. By law, you could collect between 15% and 30% of the total amount of the fraud. To date, the amount rewarded to whistleblowers has exceeded three billion dollars.
Is Your Employer Passing You Off As An Independent Contractor?
When you provide services for pay, your employment status is that of either an “employee” or an “independent contractor“. Your employment status is important since employment law treats employees and independent contractors very differently. As New York employment law attorneys point out, these differences give employers many administrative and financial incentives to (mis)classify you as independent contractors when employers should classify you as an employee.
New York employment law attorneys put it in simple terms, when an employer classifies you as an independent contractor there is no benefits package, including no overtime pay, sick days, vacations days, health insurance or pensions. The employer does not have to withhold taxes from your pay and avoids paying unemployment insurance, Medicare and Social Security for those workers. Employers provide independent contractors with an Internal Revenue Service (IRS) Form 1099 in place of the Form W-2. Independent contractors are not protected under The Fair Labor Standards Act (FLSA).
Employers can suffer serious consequences for misclassifying employees as independent contractors. Failure to classify properly an employee can lead to substantial financial liability. In addition to retroactive wages and benefits owed the misclassified employees, there are taxes, substantial fines and penalties involved. Areas that misclassification can effect include:
- Worker injury claims. If an injury occurs on the job, state workers’ compensation laws usually provide compensation for the injured party. If an independent contractor files a claim and is determined to be an employee of the organization, it could result in civil action and fines against the employer.
- Worker unemployment claims. In some states, unemployment compensation claims by workers classified as independent contractors may trigger an audit of the employer. If the audit finds misclassification, the employer is liable.
- Discrimination claims. Though anti-discrimination law has not generally afforded protection to independent contractors, caution is in order. Some courts have allowed the protection to spill over to include independent contractors.
- Federal tax liability. The adjective that comes up most often to describe the financial liability for misclassification of employees is “onerous”.
- Third party liability. Responsibility for injured third parties may hang on the determination if a worker is properly classified. A word of caution to employers: Some courts have found that using independent contractors does not shield an employer from liability.
State and federal officials have stepped up their pursuit of companies trying to pass off their employees as independent contractors. If you are located in New York and believe an employer has misclassified you as an independent contractor, you may be entitled compensation and should contact New York employment law attorneys for a consultation.