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Hartford, Conn. (WTNH) – The State Labor Department has prosecuted over 350 businesses in the past two years for mis-classifying workers as independent contractors in order to avoid paying unemployment taxes, workers compensation premiums, and health care benefits.

“It’s been rampant for years but it’s been exacerbated in this tough economy that we’re in,” said Glenn Marshall of the Carpenter’s Union.

A special task force on the issue, that includes labor, management, the Attorney General and Chief State’s Attorney’s Office is proposing a crackdown and increasing the penalty from $300 per violation to $300 per day of the violation.

“Everyone loses when an employer misclassified and employee as an independent contractor. The citizens of Connecticut lose when taxes aren’t being paid and the state is picking up the tab for benefits that are supposed to be provided by employers,” said Don Shubert of the Connecticut Construction Industry Assoc.

The illegal activity allows some unscrupulous contractors to way underbid legitimate contractors thus hurting their business and their employees.

“The measures that we are announcing today will take a giant step toward ending this chronic surge on legitimate business, taxpayers and employees,” said Attorney General Blumenthal.

Members of the task force also say some unscrupulous contractors are taking advantage of undocumented aliens in this manner as well.